OPINIONS OF THE ACCOUNTING PRINCIPLES BOARD
Accounting for Leases in Financial Statements of Lessors
1. This Opinion sets forth the Board's views as to accounting for the revenue and expense related to, and the investment in, property leased to others. Because of the highly specialized problems involved, this Opinion does not apply to lease agree-ments concerning natural resources such as oil, gas, timber and mineral rights.
2. The principal accounting problems of lessors concern the allocation of revenue and expense to the accounting periods covered by a lease. Although the lease typically establishes a schedule of rent to be received by the lessor, the treatment of this rent as revenue in the period of receipt does not necessarily result in a fair measurement of the lessor's periodic income dur-ing the term of the lease. The allocation to accounting periods of acquisition and operating costs of the leased property and of costs of negotiating and closing the lease needs to be systematic, rational, and consistent with the method of recognizing revenue. The description and classification in the balance sheet of the investment in leasing activities is also of importance.
3. Lessors may engage in leasing activities to accomplish one or more objectives, such as: investing funds; facilitating the
Issued by the Accounting Principles Board of the American Institute of Certified Public Accountants
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