In short
A sales-type lease is a lessor's lease that meets any of the five lease classification criteria. The lessor derecognizes the underlying asset, recognizes a net investment in the lease and recognizes any selling profit or loss at commencement.
Key takeaways
- The net investment is the lease receivable plus the present value of the unguaranteed residual asset.
- Interest income is then earned on the net investment over the lease term.
- If collection isn't probable, the asset isn't derecognized and payments received are a deposit liability.
Where it's tested
BAR: Lease Accounting — Lessor Perspective — study notes, a five-minute revision sheet and practice questions.
Practise: 3 questions
Question 1 of 3 · 0 answered
What is the primary accounting difference between a sales-type lease and a direct financing lease for a lessor?