Fun With Leases: A Student Case Study

• In Event: Teaching Learning and Curriculum

Abstract

This case study exposes students to complex lease transactions, requiring research in both the FASB Accounting Standards Codification and archived standards. It remains relevant regardless of any forthcoming FASB/IASB joint convergence project or other FASB changes in lease accounting standards because the lease inception date determines which authoritative literature to apply in calculating how to amortize or expense lease transactions over the life of the lease. Parties to the lease should adopt newer standards prospectively. Students must ascertain (1) key facts needed to classify the given leases; (2) the appropriate accounting literature; (3) how to record the leases at inception including payment allocation; and (4) what, if any, changes to make to obtain operating lease treatment.

Authors

• Alan Reinstein, Wayne State University

• Natalie T Churyk, Northern Illinois University

• Lance Smith, Ernst & Young