Question
At initial recognition, how are the lessee's right-of-use asset and lease liability measured in a finance lease?
Tap to flip
Answer
At the present value of future lease payments.
Tap to flip back
Question
How does lease classification affect leverage ratios from the lessee's perspective?
Tap to flip
Answer
Finance lease increases reported debt, making leverage ratios look worse.
Tap to flip back
Question
Under US GAAP, how are cash payments classified for a finance lease?
Tap to flip
Answer
Interest in CFO; principal repayment in CFF.
Tap to flip back