About This Chapter
Accounting for Operating & Capital Leases - Chapter Summary
What are operating and capital leases? How do they impact financial statements? These brief text lessons highlight the important facts regarding these topics. You will have the opportunity to review definitions and examples that help to clarify and encourage retention of this material. Lessons are accessible 24/7 from any device and transcripts can also be printed for easy reference. Self-assessment quizzes help you determine how much you have learned and whether you need to continue reviewing any topic. Once you have finished reviewing this chapter, you should be able to do the following:
- Share the definition and an example of an operating lease
- Describe the requirements of a capital lease in accounting
- State the impact of operating and capital leases on financial statements
- List and discuss three methods of capital asset disposal
1. Operating Lease in Accounting: Definition, Calculation & Example
In this lesson, we will identify the nature of leases, the requirements that must be met to treat a lease as an operating lease, and how to account for an operating lease.
2. Capital Lease in Accounting: Definition, Requirements & Example
In this lesson, we'll discuss the nature of capital leases. We'll look at what it means to 'own' an asset from an accounting standpoint so that we can understand why the accounting for capital leases differs from the accounting for operating leases. We'll then look at this accounting and some of its complexities.
3. Impact of Capital Leases on Financial Statements
In this lesson, you'll learn how to record the journal entries for a capital lease. You'll also learn what impact a capital lease has on the balance sheet, income statement, and cash flow statement for a lessee.
4. Impact of Operating Leases on Financial Statements
In this lesson, you'll learn how to record the journal entries for an operating lease. You'll also learn what impact an operating lease has on the balance sheet, income statement, and cash flow statement.
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Other chapters within the Accounting 202: Intermediate Accounting II course
- Accounting for Fixed & Intangible Assets
- Accounting for Securities & Investments
- Accounting for Liabilities & Contingencies
- Accounting for Bonds & Notes Payable
- Accounting for Shareholder Equity & Comprehensive Income
- Cash Flows & Disclosures
- Accounting for Corporate Income Taxes
- Pensions & Post-Retirement Benefits
- Identifying & Correcting Errors in Accounting
- Studying for Accounting 202