Lease Accounting for Lessors | Overview | IFRS 16

The lessor must first classify the lease as a finance lease or an operating lease. If it’s a finance lease, the lessor will: • Record sales revenue and cost of goods sold (if the lessor is a manufacturer or a dealer) on the lease commencement date • Remove the asset from its statement of financial position • Record a lease receivable • Record interest revenue throughout the lease If it’s an operating lease, the lessor will: • Keep the asset on its statement of financial position • Record depreciation expense for the asset • Record lease revenue throughout the lease on a straight-line basis — Edspira is the creation of Michael McLaughlin, an award-winning professor who went from teenage homelessness to a PhD. Edspira’s mission is to make a high-quality business education freely available to the world. — SUBSCRIBE FOR A FREE 53-PAGE GUIDE TO THE FINANCIAL STATEMENTS, PLUS: • A 23-PAGE GUIDE TO MANAGERIAL ACCOUNTING • A 44-PAGE GUIDE TO U.S. TAXATION • A 75-PAGE GUIDE TO FINANCIAL STATEMENT ANALYSIS • MANY MORE FREE PDF GUIDES AND SPREADSHEETS * eepurl.com/dIaa5z — SUPPORT EDSPIRA ON PATREON *www.patreon.com/prof_mclaughlin — GET CERTIFIED IN FINANCIAL STATEMENT ANALYSIS, IFRS 16, AND ASSET-LIABILITY MANAGEMENT * edspira.thinkific.com/ — LISTEN TO THE SCHEME PODCAST * Apple Podcasts: podcasts.apple.com/us/podcast/scheme/id1522352725 * Spotify: open.spotify.com/show/4WaNTqVFxISHlgcSWNT1kc * Website: www.edspira.com/podcast-2/ — GET TAX TIPS ON TIKTOK * www.tiktok.com/@prof_mclaughlin — ACCESS INDEX OF VIDEOS * www.edspira.com/index — CONNECT WITH EDSPIRA * Facebook: www.facebook.com/Edspira * Instagram: www.instagram.com/edspiradotcom * LinkedIn: www.linkedin.com/company/edspira — CONNECT WITH MICHAEL * Twitter: www.twitter.com/Prof_McLaughlin * LinkedIn: www.linkedin.com/in/prof-michael-mclaughlin — ABOUT EDSPIRA AND ITS CREATOR * www.edspira.com/about/ * michaelmclaughlin.com/

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