Accounting Treatment of Operating Leases


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Essay #: 065903
Total text length is 9,859 characters (approximately 6.8 pages).

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The beginning:
Accounting Treatment of Operating Leases
Does the Lessee have to book the journal entries for the for the repairs and maintenance for the minimum payments?
In order to effectively answer this question, it is imperative to define what a minimum payment constitutes in accordance with the FASB and GAAP standards. According to ASC 840-1-25(6) the concept of a Minimum Payment has three vital components. These components are: (1) any guarantee by the Lessee to make minimum rental payments throughout the lease term; (2) any guarantee by the lessee (including by a third party related to the lessee) of the residual value at the expiration of the lease term, whether or not payment of the guarantee constitutes a purchase of the leased property.If the...
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.....g leases was extrapolated across the entire population, the amount of capital saved would top $1 trillion(Walther, 132). As a direct and consequential result, the standards of creating an Operating Lease will be modified to be treated-from an accounting standpoint-as a capital lease (FASB, 47).
Works Cited
Financial Accounting Standards Board. Statement of Financial Accounting Standards, Restatement No. 13. Washington D.C., FASB, 2008
FASB Emerging Issues Task Force. Accounting by Lessees for Maintaining Deposits under Lease Agreements. Washington D.C. FASB, 2008
Financial Accounting Foundation. Accounting Standards Codification. Norwalk. FAF, 2010
Walther, Lawrence. Principles of Accounting Salt Lake City. Utah State University Press, 2010