{"schema_version":2,"canonical_url":"https://asc.understandingaccounting.org/asc/842/30/#30-initial-measurement","source":"FASB Accounting Standards Codification, Basic View","usage":"Study and research edition. Verify current requirements with the official source. Summaries, enrichment, and tags are machine-generated study aids. Paragraph html preserves source markup; snippet is abbreviated. Pending content is not necessarily effective.","topic":"842","topic_title":"Leases","subtopic":"842-30","subtopic_title":"Lessor","section":{"number":"30","label":"30 Initial Measurement","anchor":"30-initial-measurement","is_sec":false,"groups":[{"block":null,"heading":"Sales-Type and Direct Financing Leases","paragraphs":[{"citation":"842-30-30-1","para":"30-1","html":"<div class=\"asc-body\"><div class=\"norm-text\"> <span class=\"sfragment\" id=\"sfr_E53A1D5C-6E92-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">At the <a href=\"/glossary/c/#commencement-date-of-the-lease-commencement-date\" class=\"term\" title=\"The date on which a lessor makes an underlying asset available for use by a lessee. See paragraphs 842-10-55-19842-10-55-20842-10-55-21 for implementation guidance on the commencement date.\"><span>commencement date</span></a>, for a <a href=\"/glossary/s/#sales-type-lease\" class=\"term\" title=\"From the perspective of a lessor, a lease that meets one or more of the criteria in paragraph 842-10-25-2 and is not an operating lease in accordance with paragraph 842-10-25-3A.\"><span>sales-type lease</span></a>, a <a href=\"/glossary/l/#lessor\" class=\"term\" title=\"An entity that enters into a contract to provide the right to use an underlying asset for a period of time in exchange for consideration.\"><span>lessor</span></a> shall measure the <a href=\"/glossary/n/#net-investment-in-the-lease\" class=\"term\" title=\"For a sales-type lease, the sum of the lease receivable and the unguaranteed residual asset. For a direct financing lease, the sum of the lease receivable and the unguaranteed residual asset, net of any deferred selling profit.\"><span>net investment in the lease</span></a> to include both of the following:</span></span> <ol class=\"ol-norm\"> <li class=\"li-norm\"><span class=\"linum\">a</span> <div class=\"p\"> <span class=\"sfragment\" id=\"sfr_E53A1E4B-6E92-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">The <a href=\"/glossary/l/#lease-receivable\" class=\"term\" title=\"A lessor's right to receive lease payments arising from a sales-type lease or a direct financing lease plus any amount that a lessor expects to derive from the underlying asset following the end of the lease term to the extent that it is guaranteed by the lessee or any other third party unrelated to the lessor, measured on a discounted basis.\"><span>lease receivable</span></a>, which is measured at the present value, discounted using the <a href=\"/glossary/r/#rate-implicit-in-the-lease\" class=\"term\" title=\"The rate of interest that, at a given date, causes the aggregate present value of (a) the lease paymentsand (b) the amount that a lessor expects to derive from the underlying asset following the end of the lease termto equal the sum of (1) the fair value of the underlying asset minus any related investment tax credit retained and expected to be realized by the lessor and (2) any deferred initial direct costs of the lessor. However, if the rate determined in accordance with the preceding sentence is less than zero, a rate implicit in the lease of zero shall be used.\"><span>rate implicit in the lease</span></a>, of:</span></span> </div> <ol class=\"ol-norm\"> <li class=\"li-norm\"><span class=\"linum\">1</span> <div class=\"p\"> <span class=\"sfragment\" id=\"sfr_E53A1F16-6E92-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">The <a href=\"/glossary/l/#lease-payments\" class=\"term\" title=\"See paragraph 842-10-30-5 for what constitutes lease payments from the perspective of a lessee and a lessor.\"><span>lease payments</span></a> (as described in paragraph <a href=\"/asc/842/10/#842-10-30-5\" class=\"xref\">842-10-30-5</a>) not yet received by the lessor</span></span> </div> </li> <li class=\"li-norm\"><span class=\"linum\">2</span> <div class=\"p\"> <span class=\"sfragment\" id=\"sfr_E53A1FE8-6E92-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">The amount the lessor expects to derive from the <a href=\"/glossary/u/#underlying-asset\" class=\"term\" title=\"An asset that is the subject of a lease for which a right to use that asset has been conveyed to a lessee. The underlying asset could be a physically distinct portion of a single asset.\"><span>underlying asset</span></a> following the end of the <a href=\"/glossary/l/#lease-term\" class=\"term\" title=\"The noncancellable period for which a lessee has the right to use an underlying asset, together with all of the following: Periods covered by an option to extend the lease if the lessee is reasonably certain to exercise that option Periods covered by an option to terminate the lease if the lessee is reasonably certain not to exercise that option Periods covered by an option to extend (or not to terminate) the lease in which exercise of the option is controlled by the lessor.\"><span>lease term</span></a> that is guaranteed by the <a href=\"/glossary/l/#lessee\" class=\"term\" title=\"An entity that enters into a contract to obtain the right to use an underlying asset for a period of time in exchange for consideration.\"><span>lessee</span></a> or any other third party unrelated to the lessor</span></span> </div> </li> </ol> </li> <li class=\"li-norm\"><span class=\"linum\">b</span> <div class=\"p\"> <span class=\"sfragment\" id=\"sfr_E53A20BD-6E92-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">The <a href=\"/glossary/u/#unguaranteed-residual-asset\" class=\"term\" title=\"The amount that a lessor expects to derive from the underlying asset following the end of the lease term that is not guaranteed by the lessee or any other third party unrelated to the lessor, measured on a discounted basis.\"><span>unguaranteed residual asset</span></a> at the present value of the amount the lessor expects to derive from the underlying asset following the end of the lease term that is not guaranteed by the lessee or any other third party unrelated to the lessor, discounted using the rate implicit in the lease.</span></span> </div> </li> </ol> </div> </div>","snippet":"At the commencement date, for a sales-type lease, a lessor shall measure the net investment in the lease to include both of the following:\n(a) The lease receivable, which is measured at the present value, discounted usin…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:325ad66519be2348c75494e5ab244db51b86e3152f858acddf034c27e8f847ea","downloaded_from":"2026-09-10T01:57:17.907Z","last_downloaded_at":"2026-09-10T01:57:17.907Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479244","source_sha256":"212cedb6ed38e5d7271a8940e8a8e08dbc0ca983ae6991fa5b81765d4da7097f"}},{"citation":"842-30-30-2","para":"30-2","html":"<div class=\"asc-body\"><div class=\"norm-text\"> <span class=\"sfragment\" id=\"sfr_E53A21C5-6E92-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">At the commencement date, for a <a href=\"/glossary/d/#direct-financing-lease\" class=\"term\" title=\"From the perspective of a lessor, a lease that meets none of the criteria in paragraph 842-10-25-2 but meets the criteria in paragraph 842-10-25-3(b)and is not an operating lease in accordance with paragraph 842-10-25-3A.\"><span>direct financing lease</span></a>, a lessor shall measure the net investment in the lease to include the items in paragraph <a href=\"/asc/842/30/#842-30-30-1\" class=\"xref\">842-30-30-1(a) through (b)</a>, reduced by the amount of any selling profit.</span></span> </div> </div>","snippet":"At the commencement date, for a direct financing lease, a lessor shall measure the net investment in the lease to include the items in paragraph 842-30-30-1(a) through (b), reduced by the amount of any selling profit.","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:5e31631db101543fdd17f2a073e5c83542078bbea8bbaca65c45830d59d29b79","downloaded_from":"2026-09-10T01:57:17.907Z","last_downloaded_at":"2026-09-10T01:57:17.907Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479244","source_sha256":"212cedb6ed38e5d7271a8940e8a8e08dbc0ca983ae6991fa5b81765d4da7097f"}},{"citation":"842-30-30-3","para":"30-3","html":"<div class=\"asc-body\"><div class=\"norm-text\"> <span class=\"sfragment\" id=\"sfr_E53A23CF-6E92-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">See Example 1 (paragraphs <div class=\"xref-range displayInline\"><a href=\"/asc/842/30/#842-30-55-18\" class=\"xref\">842-30-55-18 through 55-43</a></div>) for an illustration of the requirements for sales-type and direct financing leases.</span></span> </div> </div>","snippet":"See Example 1 (paragraphs 842-30-55-18 through 55-43) for an illustration of the requirements for sales-type and direct financing leases.","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:99b3f89555d539a04977dff8618d97b40822b2bafea1fe136ffaa059a0e03494","downloaded_from":"2026-09-10T01:57:17.907Z","last_downloaded_at":"2026-09-10T01:57:17.907Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479244","source_sha256":"212cedb6ed38e5d7271a8940e8a8e08dbc0ca983ae6991fa5b81765d4da7097f"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:06e44e8f75a94117f1048f1756f296e5e1d8765f94a3d03aa4831ba6a922094d","downloaded_from":"2026-09-10T01:57:17.907Z","last_downloaded_at":"2026-09-10T01:57:17.907Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479244","source_sha256":"212cedb6ed38e5d7271a8940e8a8e08dbc0ca983ae6991fa5b81765d4da7097f"}},{"block":null,"heading":"Operating Leases","paragraphs":[{"citation":"842-30-30-4","para":"30-4","html":"<div class=\"asc-body\"><div class=\"norm-text\"> <span class=\"sfragment\" id=\"sfr_E53A24F9-6E92-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">A <a href=\"/glossary/l/#lessor\" class=\"term\" title=\"An entity that enters into a contract to provide the right to use an underlying asset for a period of time in exchange for consideration.\"><span>lessor</span></a> shall continue to measure the <a href=\"/glossary/u/#underlying-asset\" class=\"term\" title=\"An asset that is the subject of a lease for which a right to use that asset has been conveyed to a lessee. The underlying asset could be a physically distinct portion of a single asset.\"><span>underlying asset</span></a> subject to an <a href=\"/glossary/o/#operating-lease\" class=\"term\" title=\"From the perspective of a lessee, any lease other than a finance lease. From the perspective of a lessor, any lease other than a sales-type lease or a direct financing lease.\"><span>operating lease</span></a> in accordance with other Topics.</span></span> </div> </div>","snippet":"A lessor shall continue to measure the underlying asset subject to an operating lease in accordance with other Topics.","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:bbefe51b918369829d02c0b3f777eb233afb68ec1818f319968978cc15298e46","downloaded_from":"2026-09-10T01:57:17.907Z","last_downloaded_at":"2026-09-10T01:57:17.907Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479244","source_sha256":"212cedb6ed38e5d7271a8940e8a8e08dbc0ca983ae6991fa5b81765d4da7097f"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:3ee5c1a7f0d0babdfb0cf016d242273f6cb63787f9854fdc8eb0eaa9af96b1b7","downloaded_from":"2026-09-10T01:57:17.907Z","last_downloaded_at":"2026-09-10T01:57:17.907Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479244","source_sha256":"212cedb6ed38e5d7271a8940e8a8e08dbc0ca983ae6991fa5b81765d4da7097f"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:afa93cdb7c709be1d252d885e5d344a37cd15927c2f0e633e387b058ccf22756","downloaded_from":"2026-09-10T01:57:17.907Z","last_downloaded_at":"2026-09-10T01:57:17.907Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479244","source_sha256":"212cedb6ed38e5d7271a8940e8a8e08dbc0ca983ae6991fa5b81765d4da7097f"}},"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:afa93cdb7c709be1d252d885e5d344a37cd15927c2f0e633e387b058ccf22756","downloaded_from":"2026-09-10T01:57:17.907Z","last_downloaded_at":"2026-09-10T01:57:17.907Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479244","source_sha256":"212cedb6ed38e5d7271a8940e8a8e08dbc0ca983ae6991fa5b81765d4da7097f"}}