Hw assignment is the first file, the 2nd and 3rd file are sources that can be used to complete it if needed
HW #2 Leases 1. Define finance leases and operating leases. Include what criterion (There are 5 criteria and include things like ownership is transferred at the end of the lease) is used to determine whether a lease is a finance or an operating lease. (Look to ASC 842). 2. Describe how the accounting differs and how it is similar between finance leases and operating leases (think balance sheet and income statement effect). One approach could be making a list of how they are similar and how they differ. You can also show the difference by referencing the journal entries from the PWC videos we watched in class or the examples we worked. (Look to ASC 842). 3. For the lessor (the one leasing the property to someone else), what type of lease classifications exist (Look to ASC 842 or the PWC file under course documents)? 4. From the lessor’s standpoint (the one leasing to someone else), what are the important criteria to determine the appropriate accounting treatment (Look to ASC 842 or the PWC file under course documents)? 5. What are the main accounting treatment differences between the Lessor’s types of leases (Look to ASC 842 or the PWC file under course documents)? PWC link to leasing videos At the bottom of this link, you go to Youtube for the videos. https://www.pwc.com/us/en/cfodirect/publications/accounting-guides/pwc-lease-accounting-guide-asc-842.html Here is the Youtube link directly. https://www.youtube.com/playlist?list=PLk2yg8hkVi_8pPXfqxHupwQtGeHO3jWvS Lease accounting guide www.pwc.com Leases Updated December 2018 This publication has been prepared for general informational purposes, and does not constitute professional advice on facts and circumstances specific to any person or entity. You should not act upon the information contained in this publication without obtaining specific professional advice. No representation or warranty (express or implied) is given as to the accuracy or completeness of the information contained in this publication. The information contained in this publication was not intended or written to be used, and cannot be used, for purposes of avoiding penalties or sanctions imposed by any government or other regulatory body. PricewaterhouseCoopers LLP, its members, employees, and agents shall not be responsible for any loss sustained by any person or entity that relies on the information contained in this publication. Certain aspects of this publication may be superseded as new guidance or interpretations emerge. Financial statement preparers and other users of this publication are therefore cautioned to stay abreast of and carefully evaluate subsequent authoritative and interpretative guidance. The FASB Accounting Standards Codification® material is copyrighted by the Financial Accounting Foundation, 401 Merritt 7, Norwalk, CT 06856, and is reproduced with permission. i PwC guide library Other titles in the PwC accounting and financial reporting guide series: □ Bankruptcies and liquidations □ Business combinations and noncontrolling interests, global edition □ Consolidation and equity method of accounting □ Derivative and hedging □ Fair value measurements, global edition □ Financial statement presentation □ Financing transactions □ Foreign currency □ IFRS and US GAAP: similarities and differences □ Income taxes □ Loans and investments □ Property, plant, equipment and other assets □ Reinsurance—short duration contracts □ Revenue from contracts with customers, global edition □ Stock-based compensation □ Transfers and servicing of financial assets □ Utilities and power companies http://www.pwc.com/us/en/cfodirect/publications/accounting-guides/accounting-for-bankruptcies-and-liquidations.jhtml?display=/us/en/cfodirect/publications/accounting-guides http://www.pwc.com/us/en/cfodirect/publications/accounting-guides/accounting-for-bankruptcies-and-liquidations.jhtml?display=/us/en/cfodirect/publications/accounting-guides http://www.pwc.com/us/en/cfodirect/publications/accounting-guides/global-guide-to-accounting-for-business-combinations-and-noncontrolling-interests.html http://www.pwc.com/us/en/cfodirect/publications/accounting-guides/global-guide-to-accounting-for-business-combinations-and-noncontrolling-interests.html http://www.pwc.com/us/en/cfodirect/publications/accounting-guides/consolidation-framework-equity-method-accounting-vie-guide.html http://www.pwc.com/us/en/cfodirect/publications/accounting-guides/guide-to-accounting-for-derivative-instruments-and-hedging-activities-2013-edition.jhtml?display=/us/en/cfodirect/publications/accounting-guides http://www.pwc.com/us/en/cfodirect/publications/accounting-guides/fair-value-measurements-asc-820.html http://www.pwc.com/us/en/cfodirect/publications/accounting-guides/fair-value-measurements-asc-820.html http://www.pwc.com/us/en/cfodirect/publications/accounting-guides/financial-statement-presentation-accounting-guide.jhtml?display=/us/en/cfodirect/publications/accounting-guides http://www.pwc.com/us/en/cfodirect/publications/accounting-guides/financing-transactions-debt-equity-instruments.jhtml?display=/us/en/cfodirect/publications/accounting-guides http://www.pwc.com/us/en/cfodirect/publications/accounting-guides/foreign-currency-reporting.jhtml?display=/us/en/cfodirect/publications/accounting-guides http://www.pwc.com/us/en/cfodirect/publications/accounting-guides/ifrs-and-us-gaap-similarities-and-differences.html http://www.pwc.com/us/en/cfodirect/publications/accounting-guides/guide-to-accounting-for-income-taxes-2013-edition.jhtml?display=/us/en/cfodirect/publications/accounting-guides http://www.pwc.com/us/en/cfodirect/publications/accounting-guides/revenue-recognition-accounting-financial-reporting-guide.jhtml?display=/us/en/cfodirect/publications/accounting-guides http://www.pwc.com/us/en/cfodirect/publications/accounting-guides/guide-to-accounting-for-stock-based-compensation-2013-edition.jhtml?display=/us/en/cfodirect/publications/accounting-guides http://www.pwc.com/us/en/cfodirect/publications/accounting-guides/guide-to-accounting-for-transfers-and-servicing-of-financial-assets-2013-edition.jhtml?display=/us/en/cfodirect/publications/accounting-guides http://www.pwc.com/us/en/cfodirect/publications/accounting-guides/guide-to-accounting-for-utilities-and-power-companies-2013.jhtml?display=/us/en/cfodirect/publications/accounting-guides ii Acknowledgments The Leases guide represents the efforts and ideas of many individuals within PwC. The following PwC people contributed to the contents or served as technical reviewers of this publication: John Bishop Shannon Detling Justin Frenzel Heather Horn Ashima Jain Marc Jerusalem Jillian Pearce Mark Pollock Suzanne Stephani Scott Tornberg Valerie Wieman iii Preface PwC is pleased to offer our Leases guide. This guide was fully updated in August 2018. Since then, certain sections have been updated to reflect new guidance or interpretations. See Appendix D, Summary of significant changes, for more information. The FASB’s new standard on leases, ASC 842, will replace today’s leases guidance in 2019. This guide discusses lessee and lessor accounting under ASC 842. The first four chapters provide an introduction and guidance on determining whether an arrangement is (or contains) a lease and how to classify and account for lease and nonlease components. This guide also discusses the modification, remeasurement, and termination of a lease, sale and leaseback transactions, leveraged lease transactions, as well as other topics. Chapters 9 and 10 address the presentation and disclosure requirements as well as the effective date and transition. References to US GAAP Definitions, full paragraphs, and excerpts from the FASB’s Accounting Standards Codification are clearly designated, either within quotes in the regular text or enclosed within a shaded box. In some instances, guidance was cited with minor editorial modification to flow in the context of the PwC Guide. The remaining text is PwC’s original content. References to other chapters and sections in this guide When relevant, the discussion includes general and specific references to other chapters of the guide that provide additional information. References to another chapter or particular section within a chapter are indicated by the abbreviation “LG” followed by the specific section number (e.g., LG 2.3.2 refers to section 2.3.2 in chapter 2 of this guide). References to other PwC guidance This guide focuses on the accounting and financial reporting considerations for leases. It supplements information provided by the authoritative accounting literature and other PwC guidance. This guide provides general and specific references to chapters in other PwC guides to assist users in finding other relevant information. References to other guides are indicated by the applicable guide abbreviation followed by the specific chapter or section number. The other PwC guides referred to in this guide, including their abbreviations are: □ Business combinations and noncontrolling interests (BCG) □ Consolidation and equity method of accounting guide (CG) □ Financial statement presentation (FSP) □ Financing transactions (FG) □ Income taxes (TX) □ Loans and investments (LI) Preface iv □ Revenue from contracts with customers (RR) □ Stock-based compensation (SC) □ Transfers and servicing of financial assets (TS) In addition, PwC’s Accounting and reporting manual (the ARM) provides information about various accounting matters in US GAAP. PwC guides may be obtained through CFOdirect (www.cfodirect.com), PwC’s comprehensive online resource for financial executives, a subscription to Inform (www.pwcinform.com), PwC’s online accounting and financial reporting reference tool, or by contacting a PwC representative. Guidance date Other information The appendices to this guide include guidance on professional literature, a listing of technical references and abbreviations, definitions of key terms, and a summary of significant changes from the previous edition. * * * * * This guide has been prepared to support you in applying the leases accounting guidance. It should be used in combination with a thorough analysis of the relevant facts and circumstances, review of the authoritative accounting literature, and appropriate professional and technical advice. We hope you find the information and insights in this guide useful. Paul Kepple US Chief Accountant This guide considers guidance as of August 31, 2018. Since then, certain sections have been updated to reflect new guidance or interpretations. See Appendix D, Summary of significant changes, for more information. Additional updates may be made to keep pace with significant developments. Users should ensure they are using the most recent edition available on CFOdirect (www.cfodirect.com) or Inform (www.pwcinform.com). http://www.pwcinform.com/ v Table of contents 1 Introduction 1.1 Background ...........................................................................................................................1-2 1.2 High-level overview ..............................................................................................................1-4 1.3 Comparison of ASC 842 and ASC 840 ................................................................................1-6 1.4 Disclosures ............................................................................................................................1-10 1.5 Transition and effective date ...........................................