Place line lease easily

Aug 6th, 2022
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How to place line lease

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hi everyone welcome back to my channel if you havent already please subscribe as videos come out every week about the cpa process or technical areas also if you like what you see please give this video a thumbs up so today we are going to simplify how to do lease accounting with the use of some examples and then ill talk about case writing tips to help you get depth in this area so today were going to go over how important is lease accounting on your exams what are some definitions we might need to know prior to learning about leases how to do lease and lease or accounting using ifrs then how to do lease and lease or accounting using aspy and then lastly well go through how to get depth in your case writing with leases so the short answer here is that youll need to know leases pretty well throughout the whole pep program since even at the core one module youll need to know this content at a level a youll be expected to retain that knowledge throughout your electives and the cp

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Capital leases (now finance), resemble financed purchases; the lease term spans most of the assets useful life. Operating leases resemble rental agreements; the asset is used for a set time with useful life remaining at lease end.
Rent expense is calculated on a straight-line basis. Lease agreements may include rent abatements, and/or escalations.
Accrued rent vs deferred rent While accrued rent occurs when the timing of rent expense incurred differs from when payments are due, deferred rent is a result of a difference in the amount of the straight-line expense recognized and cash paid for rent in the reporting period.
An operating lease is a contract that permits the use of an asset without transferring the ownership rights of said asset. A finance lease is a contract that permits the use of an asset and transfers ownership after the lease period is complete, and the lessor meets all other contract obligations.
Under ASC 840, the lease start date for accounting purposes is the date possession is passed from the landlord to the tenant. On that date, the lessee, or tenant, should begin recording straight-line rent expense even if that date is earlier than the commencement date specified in the lease.
Under both ASC 840 and ASC 842, the formula to calculate the straight-line expense is as follows: Total net lease payments divided by the total number of periods in the lease.
However, to calculate straight-line rent expense, you simply add up total cash rent paid and divide by the lease term in months. For example, if rent is $50,000 total for a 5 year lease and the first year is free, then you would pay the $50,000 over 4 years at $12,500 per month.
Straight-line rent is the concept that the total liability under a rental arrangement should be charged to expense on an even periodic basis over the term of the contract.
An In-Place Lease, or IPL for short, is an intangible asset that is recorded as part of a purchase price allocation exercise and is meant to capture the benefit of an existing lease contract to the new property owner.
Straight-line rents Generally, for operating leases, GAAP requires fixed rent payments to be expensed straight-line over the term of the lease, whereas for federal income tax purposes, generally the rules require taxpayers to deduct rents following the payment schedule for most conventional leases.

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