CPA Exam leases Simulation. Finance Lease Vs Operating Lease Vs Sales Type Lease.

In this video lecture, I discuss CPA exam for Leases. On the CPA exam, students are expected to know the difference between finance lease versus operating lease.
✔️Accounting students and CPA Exam candidates, check my website for additional resources: farhatlectures...
📧Connect with me on social media: linktr.ee/farh...
#CPAEXAM #intermediateaccounting#accountingstudent
What Is a finance Lease?
A finance lease is a contract entitling a renter to the temporary use of an asset, and such a lease has the economic characteristics of asset ownership for accounting purposes. The finance lease requires a renter to book assets and liabilities associated with the lease if the rental contract meets specific requirements. In essence, a finance lease is considered a purchase of an asset, while an operating lease is handled as a true lease under generally accepted accounting principles (GAAP).

[@AverageGolfing]

Great Explanation.

[@AccountingLectures]

Thank you and please visit the website for more farhatlectures.com/

[@maxhall2731]

For Number 2, how come there was not a journal entry for amortization expense of the ROU on the lessee's side?

[@mohammedelattar2586]

Perfect explanation

[@AccountingLectures]

Glad you think so! Please take a took at my FAR resources: farhatlectures.pathwright.com/library/?category=CPA+Exam+FAR

[@danielgreen6984]

@@AccountingLectures

[@ckcaadil5878]

Thanks my lecturer .. i am beginner

[@AccountingLectures]

You are welcome. Please check my website for more resources such as PPT slides, multiple choice questions, trues/false and exercises. ✔farhatlectures.com/ ✔Instagram: @farhatlectures ✔ Linkedin: www.linkedin.com/in/professorfarhat/ ✔Facebook:@accountinglectures ✔Twitter: @farhatlectures 🎤Email: [e-mail]

[@TheMikeshinoda]

Professor Farhat - could you please explain as to why COGS, Sales Revenue was recognised in the 3rd Question.

[@MrPramodku]

I think, in the 3rd example, the Gain should have been recognized ?

[@manumiku]

what is operating lease ?, is it the lease sale from MM to NMEG

[@mrd3994]

Can we combine first two entries to be: Dr Rou 2090000, Cr Leasing liability 1942129 and Cr cash 147871?

[@mrd3994]

Do not under stand for question 3, do not recognize a gain for MM ?