Lesson: Lessee Accounting for Finance Leases

In this lesson, Nick Palazzolo, CPA, delves into the accounting intricacies of finance leases under the Financial Accounting Standards. With the aid of an example between EP Corporation and Alpha Construction, he steps through the process of determining the type of lease and the initial recognition and measurement of lease assets and liabilities. Prepare for an insightful breakdown of lease classification criteria, including the economic life and fair value of assets, while Nick offers clear explanations of terms like annuity due, present value factors, and incremental borrowing rates. Brush up on the practical application of these concepts with journal entry illustrations, ensuring all details are tied together in a way that solidifies understanding of lessee accounting for finance leases.