{"schema_version":2,"canonical_url":"https://asc.understandingaccounting.org/asc/842/50/","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.","number":"842-50","topic":"842","title":"Leveraged Lease Arrangements","area":"Broad Transactions","paragraphs":70,"summary":"ASC 842-50 preserves the legacy leveraged lease accounting model, but only for leases that existed at the ASC 842 transition date and meet the criteria in 842-10-65-1(z) — no new leveraged leases may be created. A lessor records a single net investment consisting of rentals receivable (net of nonrecourse debt service), investment-tax-credit receivable, estimated residual value, and unearned/deferred income (842-50-25-1; 842-50-30-1), and recognizes income only in years when the net investment (less related deferred taxes) is positive, using the rate of return that distributes total net income to those years (842-50-35-2). Important assumptions, including residual value and the projected timing of income tax cash flows, must be reviewed at least annually, with any change triggering recalculation from lease inception and immediate gain or loss recognition (842-50-35-6 through 35-8).","concepts":["leveraged lease","net investment in leveraged lease","nonrecourse debt","unearned and deferred income","investment tax credit","residual value review and recalculation","rate of return on positive net investment years","deferred taxes on leveraged leases"],"categories":["Leases","Subsequent measurement","Income taxes","Presentation"],"level":"advanced","topic_title":"Leases","sections":[{"number":"00","label":"00 Status","anchor":"00-status","is_sec":false,"groups":[{"block":null,"heading":null,"paragraphs":[{"citation":"842-50-00-1","para":"00-1","html":"<div class=\"asc-body\"><div class=\"norm-text\">The following table identifies the changes made to this Subtopic.</div><div class=\"norm-text\"><table class=\"asc-table\" id=\"SL77945726-209944\"><tr><td class=\"entry\"><strong class=\"ph b\">Paragraph</strong></td><td class=\"entry\"><strong class=\"ph b\">Action</strong></td><td class=\"entry\"><strong class=\"ph b\">Accounting Standards Update</strong></td><td class=\"entry\"><strong class=\"ph b\">Date</strong></td></tr><tr><td class=\"entry\"><a href=\"/glossary/a/#acquiree\" class=\"term\" title=\"The business or businesses that the acquirer obtains control of in a business combination. This term also includes a nonprofit activity or business that a not-for-profit acquirer obtains control of in an acquisition by a not-for-profit entity.\"><span>Acquiree</span></a></td><td class=\"entry\">Added</td><td class=\"entry\"><a href=\"/updates/asu-2016-02/\" class=\"xref\">Accounting Standards Update No. 2016-02</a></td><td class=\"entry\">02/25/2016</td></tr><tr><td class=\"entry\"><a href=\"/glossary/a/#acquirer\" class=\"term\" title=\"The entity that obtains control of the acquiree. However, in a business combination in which a variable interest entity (VIE) is acquired, the primary beneficiary of that entity always is the acquirer. (P) December 16, 2026; (N) December 16, 2026805-10-65-5The entity that obtains control of the acquiree.See paragraphs 805-10-25-4805-10-25-5 for guidance on determining the acquirer.\"><span>Acquirer</span></a></td><td class=\"entry\">Amended</td><td class=\"entry\"><a href=\"/updates/asu-2025-03/\" class=\"xref\">Accounting Standards Update No. 2025-03</a></td><td class=\"entry\">05/12/2025</td></tr><tr><td class=\"entry\"><a href=\"/glossary/a/#acquirer\" class=\"term\" title=\"The entity that obtains control of the acquiree. However, in a business combination in which a variable interest entity (VIE) is acquired, the primary beneficiary of that entity always is the acquirer. (P) December 16, 2026; (N) December 16, 2026805-10-65-5The entity that obtains control of the acquiree.See paragraphs 805-10-25-4805-10-25-5 for guidance on determining the acquirer.\"><span>Acquirer</span></a></td><td class=\"entry\">Added</td><td class=\"entry\"><a href=\"/updates/asu-2016-02/\" class=\"xref\">Accounting Standards Update No. 2016-02</a></td><td class=\"entry\">02/25/2016</td></tr><tr><td class=\"entry\"><a href=\"/glossary/a/#acquisition-by-a-not-for-profit-entity\" class=\"term\" title=\"A transaction or other event in which a not-for-profit acquirer obtains control of one or more nonprofit activities or businesses and initially recognizes their assets and liabilities in the acquirer's financial statements. When applicable guidance in Topic 805 is applied by a not-for-profit entity, the term business combination has the same meaning as this term has for a for-profit entity. Likewise, a reference to business combinations in guidance that links to Topic 805 has the same meaning as a reference to acquisitions by not-for-profit entities.\"><span>Acquisition by a Not-for-Profit Entity</span></a></td><td class=\"entry\">Added</td><td class=\"entry\"><a href=\"/updates/asu-2016-02/\" class=\"xref\">Accounting Standards Update No. 2016-02</a></td><td class=\"entry\">02/25/2016</td></tr><tr><td class=\"entry\"><a href=\"/glossary/b/#business\" class=\"term\" title=\"Paragraphs 805-10-55-3A805-10-55-4805-10-55-5805-10-55-6 and 805-10-55-8805-10-55-9 define what is considered a business.\"><span>Business</span></a></td><td class=\"entry\">Amended</td><td class=\"entry\"><a href=\"/updates/asu-2017-01/\" class=\"xref\">Accounting Standards Update No. 2017-01</a></td><td class=\"entry\">01/05/2017</td></tr><tr><td class=\"entry\"><a href=\"/glossary/b/#business\" class=\"term\" title=\"Paragraphs 805-10-55-3A805-10-55-4805-10-55-5805-10-55-6 and 805-10-55-8805-10-55-9 define what is considered a business.\"><span>Business</span></a></td><td class=\"entry\">Added</td><td class=\"entry\"><a href=\"/updates/asu-2016-02/\" class=\"xref\">Accounting Standards Update No. 2016-02</a></td><td class=\"entry\">02/25/2016</td></tr><tr><td class=\"entry\"><a href=\"/glossary/b/#business-combination\" class=\"term\" title=\"A transaction or other event in which an acquirer obtains control of one or more businesses. Transactions sometimes referred to as true mergers or mergers of equals also are business combinations. See also Acquisition by a Not-for-Profit Entity.\"><span>Business Combination</span></a></td><td class=\"entry\">Added</td><td class=\"entry\"><a href=\"/updates/asu-2016-02/\" class=\"xref\">Accounting Standards Update No. 2016-02</a></td><td class=\"entry\">02/25/2016</td></tr><tr><td class=\"entry\"><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 of the Lease (Commencement Date)</span></a></td><td class=\"entry\">Added</td><td class=\"entry\"><a href=\"/updates/asu-2016-02/\" class=\"xref\">Accounting Standards Update No. 2016-02</a></td><td class=\"entry\">02/25/2016</td></tr><tr><td class=\"entry\"><a href=\"/glossary/c/#contract\" class=\"term\" title=\"An agreement between two or more parties that creates enforceable rights and obligations.\"><span>Contract</span></a></td><td class=\"entry\">Added</td><td class=\"entry\"><a href=\"/updates/asu-2016-02/\" class=\"xref\">Accounting Standards Update No. 2016-02</a></td><td class=\"entry\">02/25/2016</td></tr><tr><td class=\"entry\"><a href=\"/glossary/c/#corporate-joint-venture\" class=\"term\" title=\"A corporation owned and operated by a small group of entities (the joint venturers) as a separate and specific business or project for the mutual benefit of the members of the group. A government may also be a member of the group. The purpose of a corporate joint venture frequently is to share risks and rewards in developing a new market, product or technology; to combine complementary technological knowledge; or to pool resources in developing production or other facilities. A corporate joint venture also usually provides an arrangement under which each joint venturer may participate, directly or indirectly, in the overall management of the joint venture. Joint venturers thus have an interest or relationship other than as passive investors. An entity that is a subsidiary of one of the joint venturers is not a corporate joint venture. The ownership of a corporate joint venture seldom changes, and its stock is usually not traded publicly. A noncontrolling interest held by public ownership, however, does not preclude a corporation from being a corporate joint venture.\"><span>Corporate Joint Venture</span></a></td><td class=\"entry\">Added</td><td class=\"entry\"><a href=\"/updates/asu-2023-05/\" class=\"xref\">Accounting Standards Update No. 2023-05</a></td><td class=\"entry\">08/23/2023</td></tr><tr><td class=\"entry\"><a href=\"/glossary/d/#delayed-equity-investment\" class=\"term\" title=\"In leveraged lease transactions that have been structured with terms such that the lessee's rent payments begin one to two years after lease inception, equity contributions the lessor agrees to make (in the lease agreement or a separate binding contract) that are used to service the nonrecourse debt during this brief period. The total amount of the lessor's contributions is specifically limited by the agreements.\"><span>Delayed Equity Investment</span></a></td><td class=\"entry\">Added</td><td class=\"entry\"><a href=\"/updates/asu-2016-02/\" class=\"xref\">Accounting Standards Update No. 2016-02</a></td><td class=\"entry\">02/25/2016</td></tr><tr><td class=\"entry\"><a href=\"/glossary/e/#estimated-residual-value\" class=\"term\" title=\"The estimated fair value of the leased property at the end of the lease term.\"><span>Estimated Residual Value</span></a></td><td class=\"entry\">Added</td><td class=\"entry\"><a href=\"/updates/asu-2016-02/\" class=\"xref\">Accounting Standards Update No. 2016-02</a></td><td class=\"entry\">02/25/2016</td></tr><tr><td class=\"entry\"><a href=\"/glossary/f/#fair-value\" class=\"term\" title=\"The price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.\"><span>Fair Value</span></a> (2nd def.)</td><td class=\"entry\">Added</td><td class=\"entry\"><a href=\"/updates/asu-2016-02/\" class=\"xref\">Accounting Standards Update No. 2016-02</a></td><td class=\"entry\">02/25/2016</td></tr><tr><td class=\"entry\"><a href=\"/glossary/j/#joint-venture\" class=\"term\" title=\"An entity owned and operated by a small group of businesses (the joint venturers) as a separate and specific business or project for the mutual benefit of the members of the group. A government may also be a member of the group. The purpose of a joint venture frequently is to share risks and rewards in developing a new market, product, or technology; to combine complementary technological knowledge; or to pool resources in developing production or other facilities. A joint venture also usually provides an arrangement under which each joint venturer may participate, directly or indirectly, in the overall management of the joint venture. Joint venturers thus have an interest or relationship other than as passive investors. An entity that is a subsidiary of one of the joint venturers is not a joint venture. The ownership of a joint venture seldom changes, and its equity interests usually are not traded publicly. A minority public ownership, however, does not preclude an entity from being a joint venture. As distinguished from a corporate joint venture, a joint venture is not limited to corporate entities.\"><span>Joint Venture</span></a></td><td class=\"entry\">Added</td><td class=\"entry\"><a href=\"/updates/asu-2023-05/\" class=\"xref\">Accounting Standards Update No. 2023-05</a></td><td class=\"entry\">08/23/2023</td></tr><tr><td class=\"entry\"><a href=\"/glossary/l/#lease\" class=\"term\" title=\"A contract, or part of a contract, that conveys the right to control the use of identified property, plant, or equipment (an identified asset) for a period of time in exchange for consideration.\"><span>Lease</span></a></td><td class=\"entry\">Added</td><td class=\"entry\"><a href=\"/updates/asu-2016-02/\" class=\"xref\">Accounting Standards Update No. 2016-02</a></td><td class=\"entry\">02/25/2016</td></tr><tr><td class=\"entry\"><a href=\"/glossary/l/#lease-inception\" class=\"term\" title=\"The date of the lease agreement or commitment, if earlier. For purposes of this definition, a commitment shall be in writing, signed by the parties in interest to the transaction, and shall specifically set forth the principal provisions of the transaction. If any of the principal provisions are yet to be negotiated, such a preliminary agreement or commitment does not qualify for purposes of this definition.\"><span>Lease Inception</span></a></td><td class=\"entry\">Added</td><td class=\"entry\"><a href=\"/updates/asu-2016-02/\" class=\"xref\">Accounting Standards Update No. 2016-02</a></td><td class=\"entry\">02/25/2016</td></tr><tr><td class=\"entry\"><a href=\"/glossary/l/#lease-modification\" class=\"term\" title=\"A change to the terms and conditions of a contract that results in a change in the scope of or the consideration for a lease (for example, a change to the terms and conditions of the contract that adds or terminates the right to use one or more underlying assets or extends or shortens the contractual lease term).\"><span>Lease Modification</span></a></td><td class=\"entry\">Added</td><td class=\"entry\"><a href=\"/updates/asu-2016-02/\" class=\"xref\">Accounting Standards Update No. 2016-02</a></td><td class=\"entry\">02/25/2016</td></tr><tr><td class=\"entry\"><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></td><td class=\"entry\">Added</td><td class=\"entry\"><a href=\"/updates/asu-2016-02/\" class=\"xref\">Accounting Standards Update No. 2016-02</a></td><td class=\"entry\">02/25/2016</td></tr><tr><td class=\"entry\"><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></td><td class=\"entry\">Added</td><td class=\"entry\"><a href=\"/updates/asu-2016-02/\" class=\"xref\">Accounting Standards Update No. 2016-02</a></td><td class=\"entry\">02/25/2016</td></tr><tr><td class=\"entry\"><a href=\"/glossary/l/#legal-entity\" class=\"term\" title=\"Any legal structure used to conduct activities or to hold assets. Some examples of such structures are corporations, partnerships, limited liability companies, grantor trusts, and other trusts.\"><span>Legal Entity</span></a></td><td class=\"entry\">Added</td><td class=\"entry\"><a href=\"/updates/asu-2016-02/\" class=\"xref\">Accounting Standards Update No. 2016-02</a></td><td class=\"entry\">02/25/2016</td></tr><tr><td class=\"entry\"><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></td><td class=\"entry\">Added</td><td class=\"entry\"><a href=\"/updates/asu-2016-02/\" class=\"xref\">Accounting Standards Update No. 2016-02</a></td><td class=\"entry\">02/25/2016</td></tr><tr><td class=\"entry\"><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></td><td class=\"entry\">Added</td><td class=\"entry\"><a href=\"/updates/asu-2016-02/\" class=\"xref\">Accounting Standards Update No. 2016-02</a></td><td class=\"entry\">02/25/2016</td></tr><tr><td class=\"entry\"><a href=\"/glossary/l/#leveraged-lease\" class=\"term\" title=\"From the perspective of a lessor, a lease that was classified as a leveraged lease in accordance with the leases guidance in effect before the effective date and for which the commencement date is before the effective date.\"><span>Leveraged Lease</span></a></td><td class=\"entry\">Added</td><td class=\"entry\"><a href=\"/updates/asu-2016-02/\" class=\"xref\">Accounting Standards Update No. 2016-02</a></td><td class=\"entry\">02/25/2016</td></tr><tr><td class=\"entry\"><a href=\"/glossary/m/#market-participants\" class=\"term\" title=\"Buyers and sellers in the principal (or most advantageous) market for the asset or liability that have all of the following characteristics: They are independent of each other, that is, they are not related parties, although the price in a related-party transaction may be used as an input to a fair value measurement if the reporting entity has evidence that the transaction was entered into at market terms They are knowledgeable, having a reasonable understanding about the asset or liability and the transaction using all available information, including information that might be obtained through due diligence efforts that are usual and customary They are able to enter into a transaction for the asset or liability They are willing to enter into a transaction for the asset or liability, that is, they are motivated but not forced or otherwise compelled to do so.\"><span>Market Participants</span></a></td><td class=\"entry\">Added</td><td class=\"entry\"><a href=\"/updates/asu-2016-02/\" class=\"xref\">Accounting Standards Update No. 2016-02</a></td><td class=\"entry\">02/25/2016</td></tr><tr><td class=\"entry\"><a href=\"/glossary/m/#minimum-lease-payments\" class=\"term\" title=\"Minimum lease payments comprise the payments that the lessee is obligated to make or can be required to make in connection with the leased property, excluding both of the following: Contingent rentals Any guarantee by the lessee of the lessor's debt and the lessee's obligation to pay (apart from the rental payments) executory costs such as insurance, maintenance, and taxes in connection with the leased property. If the lease contains a bargain purchase option, only the minimum rental payments over the lease term and the payment called for by the bargain purchase option are required to be included in the minimum lease payments. Otherwise, minimum lease payments include all of the following: The minimum rental payments called for by the lease over the lease term. Any guarantee of the residual value at the expiration of the lease term, whether or not payment of the guarantee constitutes a purchase of the leased property or of rental payments beyond the lease term by the lessee (including a third party related to the lessee) or a third party unrelated to either the lessee or the lessor, provided the third party is financially capable of discharging the obligations that may arise from the guarantee. If the lessor has the right to require the lessee to purchase the property at termination of the lease for a certain or determinable amount, that amount is required to be considered a lessee guarantee of the residual value. If the lessee agrees to make up any deficiency below a stated amount in the lessor's realization of the residual value, the residual value guarantee to be included in the minimum lease payments is required to be the stated amount, rather than an estimate of the deficiency to be made up. Any payment that the lessee must make or can be required to make upon failure to renew or extend the lease at the expiration of the lease term, whether or not the payment would constitute a purchase of the leased property. Note that the definition of lease term includes all periods, if any, for which failure to renew the lease imposes a penalty on the lessee in an amount such that renewal appears, at lease inception, to be reasonably assured. If the lease term has been extended because of that provision, the related penalty is not included in minimum lease payments. Payments made before the beginning of the lease term. The lessee is required to use the same interest rate to accrete payments to be made before the beginning of the lease term that it uses to discount lease payments to be made during the lease term. Fees that are paid by the lessee to the owners of the special-purpose entity for structuring the lease transaction. Such fees are required to be included as part of minimum lease payments (but not included in the fair value of the leased property). Lease payments that depend on a factor directly related to the future use of the leased property, such as machine hours of use or sales volume during the lease term, are contingent rentals and, accordingly, are excluded from minimum lease payments in their entirety. However, lease payments that depend on an existing index or rate, such as the Consumer Price Index or the prime interest rate, are required to be included in minimum lease payments based on the index or rate existing at lease inception; any increases or decreases in lease payments that result from subsequent changes in the index or rate are contingent rentals and, thus, affect the determination of income as accruable.\"><span>Minimum Lease Payments</span></a></td><td class=\"entry\">Added</td><td class=\"entry\"><a href=\"/updates/asu-2016-02/\" class=\"xref\">Accounting Standards Update No. 2016-02</a></td><td class=\"entry\">02/25/2016</td></tr><tr><td class=\"entry\"><a href=\"/glossary/n/#not-for-profit-entity\" class=\"term\" title=\"An entity that possesses the following characteristics, in varying degrees, that distinguish it from a business entity: Contributions of significant amounts of resources from resource providers who do not expect commensurate or proportionate pecuniary return Operating purposes other than to provide goods or services at a profit Absence of ownership interests like those of business entities. Entities that clearly fall outside this definition include the following: All investor-owned entities Entities that provide dividends, lower costs, or other economic benefits directly and proportionately to their owners, members, or participants, such as mutual insurance entities, credit unions, farm and rural electric cooperatives, and employee benefit plans.\"><span>Not-for-Profit Entity</span></a></td><td class=\"entry\">Added</td><td class=\"entry\"><a href=\"/updates/asu-2016-02/\" class=\"xref\">Accounting Standards Update No. 2016-02</a></td><td class=\"entry\">02/25/2016</td></tr><tr><td class=\"entry\"><a href=\"/glossary/o/#orderly-transaction\" class=\"term\" title=\"A transaction that assumes exposure to the market for a period before the measurement date to allow for marketing activities that are usual and customary for transactions involving such assets or liabilities; it is not a forced transaction (for example, a forced liquidation or distress sale).\"><span>Orderly Transaction</span></a></td><td class=\"entry\">Added</td><td class=\"entry\"><a href=\"/updates/asu-2016-02/\" class=\"xref\">Accounting Standards Update No. 2016-02</a></td><td class=\"entry\">02/25/2016</td></tr><tr><td class=\"entry\"><a href=\"/glossary/r/#related-parties\" class=\"term\" title=\"Related parties include: Affiliates of the entity Entities for which investments in their equity securities would be required, absent the election of the fair value option under the Fair Value Option Subsection of Section 825-10-15, to be accounted for by the equity method by the investing entity Trusts for the benefit of employees, such as pension and profit-sharing trusts that are managed by or under the trusteeship of management Principal owners of the entity and members of their immediate families Management of the entity and members of their immediate families Other parties with which the entity may deal if one party controls or can significantly influence the management or operating policies of the other to an extent that one of the transacting parties might be prevented from fully pursuing its own separate interests Other parties that can significantly influence the management or operating policies of the transacting parties or that have an ownership interest in one of the transacting parties and can significantly influence the other to an extent that one or more of the transacting parties might be prevented from fully pursuing its own separate interests.\"><span>Related Parties</span></a></td><td class=\"entry\">Added</td><td class=\"entry\"><a href=\"/updates/asu-2016-02/\" class=\"xref\">Accounting Standards Update No. 2016-02</a></td><td class=\"entry\">02/25/2016</td></tr><tr><td class=\"entry\"><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></td><td class=\"entry\">Added</td><td class=\"entry\"><a href=\"/updates/asu-2016-02/\" class=\"xref\">Accounting Standards Update No. 2016-02</a></td><td class=\"entry\">02/25/2016</td></tr><tr><td class=\"entry\"><strong class=\"ph b\">Variable Interest Entity</strong></td><td class=\"entry\">Superseded</td><td class=\"entry\"><a href=\"/updates/asu-2025-03/\" class=\"xref\">Accounting Standards Update No. 2025-03</a></td><td class=\"entry\">05/12/2025</td></tr><tr><td class=\"entry\"><strong class=\"ph b\">Variable Interest Entity</strong></td><td class=\"entry\">Added</td><td class=\"entry\"><a href=\"/updates/asu-2016-02/\" class=\"xref\">Accounting Standards Update No. 2016-02</a></td><td class=\"entry\">02/25/2016</td></tr><tr><td class=\"entry\"></td><td class=\"entry\"></td><td class=\"entry\"></td><td class=\"entry\"></td></tr><tr><td class=\"entry\"><a href=\"/asc/842/50/#842-50-05-1\" class=\"xref\">842-50-05-1</a></td><td class=\"entry\">Added</td><td class=\"entry\"><a href=\"/updates/asu-2016-02/\" class=\"xref\">Accounting Standards Update No. 2016-02</a></td><td class=\"entry\">02/25/2016</td></tr><tr><td class=\"entry\"><a href=\"/asc/842/50/#842-50-15-1\" class=\"xref\">842-50-15-1</a></td><td class=\"entry\">Amended</td><td class=\"entry\"><a href=\"/updates/asu-2023-05/\" class=\"xref\">Accounting Standards Update No. 2023-05</a></td><td class=\"entry\">08/23/2023</td></tr><tr><td class=\"entry\"><a href=\"/asc/842/50/#842-50-15-1\" class=\"xref\">842-50-15-1</a></td><td class=\"entry\">Added</td><td class=\"entry\"><a href=\"/updates/asu-2016-02/\" class=\"xref\">Accounting Standards Update No. 2016-02</a></td><td class=\"entry\">02/25/2016</td></tr><tr><td class=\"entry\"><a href=\"/asc/842/50/#842-50-25-1\" class=\"xref\">842-50-25-1</a></td><td class=\"entry\">Added</td><td class=\"entry\"><a href=\"/updates/asu-2016-02/\" class=\"xref\">Accounting Standards Update No. 2016-02</a></td><td class=\"entry\">02/25/2016</td></tr><tr><td class=\"entry\"><a href=\"/asc/842/50/#842-50-25-2\" class=\"xref\">842-50-25-2</a></td><td class=\"entry\">Added</td><td class=\"entry\"><a href=\"/updates/asu-2016-02/\" class=\"xref\">Accounting Standards Update No. 2016-02</a></td><td class=\"entry\">02/25/2016</td></tr><tr><td class=\"entry\"><a href=\"/asc/842/50/#842-50-30-1\" class=\"xref\">842-50-30-1</a></td><td class=\"entry\">Added</td><td class=\"entry\"><a href=\"/updates/asu-2016-02/\" class=\"xref\">Accounting Standards Update No. 2016-02</a></td><td class=\"entry\">02/25/2016</td></tr><tr><td class=\"entry\"><a href=\"/asc/842/50/#842-50-30-2\" class=\"xref\">842-50-30-2</a></td><td class=\"entry\">Added</td><td class=\"entry\"><a href=\"/updates/asu-2016-02/\" class=\"xref\">Accounting Standards Update No. 2016-02</a></td><td class=\"entry\">02/25/2016</td></tr><tr><td class=\"entry\"><div class=\"xref-range displayInline\"><a href=\"/asc/842/50/#842-50-35-1\" class=\"xref\">842-50-35-1 through 35-21</a></div></td><td class=\"entry\">Added</td><td class=\"entry\"><a href=\"/updates/asu-2016-02/\" class=\"xref\">Accounting Standards Update No. 2016-02</a></td><td class=\"entry\">02/25/2016</td></tr><tr><td class=\"entry\"><a href=\"/asc/842/50/#842-50-45-3\" class=\"xref\">842-50-45-3</a></td><td class=\"entry\">Amended</td><td class=\"entry\"><a href=\"/updates/asu-2023-05/\" class=\"xref\">Accounting Standards Update No. 2023-05</a></td><td class=\"entry\">08/23/2023</td></tr><tr><td class=\"entry\"><div class=\"xref-range displayInline\"><a href=\"/asc/842/50/#842-50-45-1\" class=\"xref\">842-50-45-1 through 45-3</a></div></td><td class=\"entry\">Added</td><td class=\"entry\"><a href=\"/updates/asu-2016-02/\" class=\"xref\">Accounting Standards Update No. 2016-02</a></td><td class=\"entry\">02/25/2016</td></tr><tr><td class=\"entry\"><div class=\"xref-range displayInline\"><a href=\"/asc/842/50/#842-50-50-1\" class=\"xref\">842-50-50-1 through 50-3</a></div></td><td class=\"entry\">Added</td><td class=\"entry\"><a href=\"/updates/asu-2016-02/\" class=\"xref\">Accounting Standards Update No. 2016-02</a></td><td class=\"entry\">02/25/2016</td></tr><tr><td class=\"entry\"><a href=\"/asc/842/50/#842-50-50-2\" class=\"xref\">842-50-50-2</a></td><td class=\"entry\">Amended</td><td class=\"entry\"><a href=\"/updates/asu-2022-02/\" class=\"xref\">Accounting Standards Update No. 2022-02</a></td><td class=\"entry\">03/31/2022</td></tr><tr><td class=\"entry\"><a href=\"/asc/842/50/#842-50-50-2\" class=\"xref\">842-50-50-2</a></td><td class=\"entry\">Amended</td><td class=\"entry\"><a href=\"/updates/asu-2016-13/\" class=\"xref\">Accounting Standards Update No. 2016-13</a></td><td class=\"entry\">06/16/2016</td></tr><tr><td class=\"entry\"><div class=\"xref-range displayInline\"><a href=\"/asc/842/50/#842-50-55-1\" class=\"xref\">842-50-55-1 through 55-33</a></div></td><td class=\"entry\">Added</td><td class=\"entry\"><a href=\"/updates/asu-2016-02/\" class=\"xref\">Accounting Standards Update No. 2016-02</a></td><td class=\"entry\">02/25/2016</td></tr></table></div></div>","snippet":"The following table identifies the changes made to this Subtopic.\nParagraph | Action | Accounting Standards Update | Date |\nAcquiree | Added | Accounting Standards Update No. 2016-02 | 02/25/2016 |\nAcquirer | Amended | A…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:824204f9086532dd319d4ef9962b943d09277ccb1e5308fca7a1ea00aae40350","downloaded_from":"2026-09-10T01:58:02.364Z","last_downloaded_at":"2026-09-10T01:58:02.364Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479738","source_sha256":"5325a8ae18c9ca001c412e7d354771ba94052da0d9ee0abda801ed9b907fb9f1"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:aa45b09d3595dd68121749149de5281a53d6fc50e22f963b2db1a61107cdc2cb","downloaded_from":"2026-09-10T01:58:02.364Z","last_downloaded_at":"2026-09-10T01:58:02.364Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479738","source_sha256":"5325a8ae18c9ca001c412e7d354771ba94052da0d9ee0abda801ed9b907fb9f1"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:32e8ff10f1521a8299d7c7e973e3b7a3ddea4c0bbcf360b43743f3a01fcb7451","downloaded_from":"2026-09-10T01:58:02.364Z","last_downloaded_at":"2026-09-10T01:58:02.364Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479738","source_sha256":"5325a8ae18c9ca001c412e7d354771ba94052da0d9ee0abda801ed9b907fb9f1"}},{"number":"05","label":"05 Overview and Background","anchor":"05-overview-and-background","is_sec":false,"groups":[{"block":null,"heading":null,"paragraphs":[{"citation":"842-50-05-1","para":"05-1","html":"<div class=\"asc-body\"><div class=\"norm-text\"> <span class=\"sfragment\" id=\"sfr_E6B9113D-6E92-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">This Subtopic addresses accounting for <a href=\"/glossary/l/#lease\" class=\"term\" title=\"A contract, or part of a contract, that conveys the right to control the use of identified property, plant, or equipment (an identified asset) for a period of time in exchange for consideration.\"><span>leases</span></a> that meet the definition of a <a href=\"/glossary/l/#leveraged-lease\" class=\"term\" title=\"From the perspective of a lessor, a lease that was classified as a leveraged lease in accordance with the leases guidance in effect before the effective date and for which the commencement date is before the effective date.\"><span>leveraged lease</span></a>.</span></span> </div> </div>","snippet":"This Subtopic addresses accounting for leases that meet the definition of a leveraged lease.","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:5e50f6fc71ae0cdf45f16b9990c2e08d915d92ea65b37fecc3266f58052e2a10","downloaded_from":"2026-09-10T01:58:06.448Z","last_downloaded_at":"2026-09-10T01:58:06.448Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479610","source_sha256":"48192afc224ec41c565591e127dac1bdc0cefb2ebd2c2592e028512810ccbf1a"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:b67cd83416da15b5c247020ca1e729cc8f25664d4575ecece0b936bf258f76d0","downloaded_from":"2026-09-10T01:58:06.448Z","last_downloaded_at":"2026-09-10T01:58:06.448Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479610","source_sha256":"48192afc224ec41c565591e127dac1bdc0cefb2ebd2c2592e028512810ccbf1a"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:ec196847912d47db51f085fb8e2623efa7196d7d2b4d58f078e891f3719a4a95","downloaded_from":"2026-09-10T01:58:06.448Z","last_downloaded_at":"2026-09-10T01:58:06.448Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479610","source_sha256":"48192afc224ec41c565591e127dac1bdc0cefb2ebd2c2592e028512810ccbf1a"}},{"number":"15","label":"15 Scope and Scope Exceptions","anchor":"15-scope-and-scope-exceptions","is_sec":false,"groups":[{"block":null,"heading":null,"paragraphs":[{"citation":"842-50-15-1","para":"15-1","html":"<div class=\"asc-body\"><div class=\"norm-text\"><div class=\"norm-text\"><span class=\"sfragment\" id=\"GUID-78691675-DF2D-41AE-BE85-48A51D2DC3CB\"><span class=\"sfragment-source\">This Subtopic addresses accounting for <a href=\"/glossary/l/#lease\" class=\"term\" title=\"A contract, or part of a contract, that conveys the right to control the use of identified property, plant, or equipment (an identified asset) for a period of time in exchange for consideration.\"><span>leases</span></a> that meet the criteria in transition paragraph <a href=\"/asc/842/10/#842-10-65-1\" class=\"xref\">842-10-65-1(z)</a>. If a <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> exercises an option to extend a lease that meets the criteria in transition paragraph <a href=\"/asc/842/10/#842-10-65-1\" class=\"xref\">842-10-65-1(z)</a> that it was not previously reasonably assured of exercising, the exercise of that option shall be considered a <a href=\"/glossary/l/#lease-modification\" class=\"term\" title=\"A change to the terms and conditions of a contract that results in a change in the scope of or the consideration for a lease (for example, a change to the terms and conditions of the contract that adds or terminates the right to use one or more underlying assets or extends or shortens the contractual lease term).\"><span>lease modification</span></a> as described in paragraph <a href=\"/asc/842/10/#842-10-65-1\" class=\"xref\">842-10-65-1(z)</a>. </span></span><span class=\"sfragment\" id=\"GUID-49531868-FA0D-463F-8CCC-07B36F4F6AE9\"><span class=\"sfragment-source\">A <a href=\"/glossary/j/#joint-venture\" class=\"term\" title=\"An entity owned and operated by a small group of businesses (the joint venturers) as a separate and specific business or project for the mutual benefit of the members of the group. A government may also be a member of the group. The purpose of a joint venture frequently is to share risks and rewards in developing a new market, product, or technology; to combine complementary technological knowledge; or to pool resources in developing production or other facilities. A joint venture also usually provides an arrangement under which each joint venturer may participate, directly or indirectly, in the overall management of the joint venture. Joint venturers thus have an interest or relationship other than as passive investors. An entity that is a subsidiary of one of the joint venturers is not a joint venture. The ownership of a joint venture seldom changes, and its equity interests usually are not traded publicly. A minority public ownership, however, does not preclude an entity from being a joint venture. As distinguished from a corporate joint venture, a joint venture is not limited to corporate entities.\"><span>joint venture</span></a> formation accounted for in accordance with Subtopic <a altsource=\"GUID-CE09B826-CDC8-43FF-A1EF-FB86248E753A.ditamap\" class=\"ditamap\">805-60</a> shall apply the guidance in this Subtopic applicable to the acquiring entity in a <a href=\"/glossary/b/#business-combination\" class=\"term\" title=\"A transaction or other event in which an acquirer obtains control of one or more businesses. Transactions sometimes referred to as true mergers or mergers of equals also are business combinations. See also Acquisition by a Not-for-Profit Entity.\"><span>business combination</span></a>. The joint venture shall be viewed as analogous to the acquiring entity in a business combination, and any recognized businesses and/or assets shall be viewed as analogous to an <a href=\"/glossary/a/#acquiree\" class=\"term\" title=\"The business or businesses that the acquirer obtains control of in a business combination. This term also includes a nonprofit activity or business that a not-for-profit acquirer obtains control of in an acquisition by a not-for-profit entity.\"><span>acquiree</span></a>.</span></span></div></div></div>","snippet":"This Subtopic addresses accounting for leases that meet the criteria in transition paragraph 842-10-65-1(z). If a lessee exercises an option to extend a lease that meets the criteria in transition paragraph 842-10-65-1(z…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:7e49666ba02522fc00a7bf7e893b48f5f075467e2dd72c0705a10e9055284741","downloaded_from":"2026-09-10T01:58:09.284Z","last_downloaded_at":"2026-09-10T01:58:09.284Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479509","source_sha256":"cf58fb3f827c243d7229c245eb568baf4ad951181b548b1cedb12436a26768ba"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:022ff34e5f9b5f9daef915e60ea9bffea31e5257ccb6abd5a59433eda039778e","downloaded_from":"2026-09-10T01:58:09.284Z","last_downloaded_at":"2026-09-10T01:58:09.284Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479509","source_sha256":"cf58fb3f827c243d7229c245eb568baf4ad951181b548b1cedb12436a26768ba"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:9091a875609c6873c56a2833ded3b03f163fc1ec71616972bac8a49c2bdec815","downloaded_from":"2026-09-10T01:58:09.284Z","last_downloaded_at":"2026-09-10T01:58:09.284Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479509","source_sha256":"cf58fb3f827c243d7229c245eb568baf4ad951181b548b1cedb12436a26768ba"}},{"number":"25","label":"25 Recognition","anchor":"25-recognition","is_sec":false,"groups":[{"block":null,"heading":null,"paragraphs":[{"citation":"842-50-25-1","para":"25-1","html":"<div class=\"asc-body\"><div class=\"norm-text\"> <span class=\"sfragment\" id=\"sfr_E6DA7847-6E92-1014-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 record its investment in a <a href=\"/glossary/l/#leveraged-lease\" class=\"term\" title=\"From the perspective of a lessor, a lease that was classified as a leveraged lease in accordance with the leases guidance in effect before the effective date and for which the commencement date is before the effective date.\"><span>leveraged lease</span></a>. The net of the balances of the following accounts as measured in accordance with this Subtopic shall represent the lessor's initial and continuing investment in leveraged leases:</span></span> <ol class=\"ol-norm\"> <li class=\"li-norm\"><span class=\"linum\">a</span> <div class=\"p\"> <span class=\"sfragment\" id=\"sfr_E6DA7983-6E92-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">Rentals receivable</span></span> </div> </li> <li class=\"li-norm\"><span class=\"linum\">b</span> <div class=\"p\"> <span class=\"sfragment\" id=\"sfr_E6DA7A5D-6E92-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">Investment-tax-credit receivable</span></span> </div> </li> <li class=\"li-norm\"><span class=\"linum\">c</span> <div class=\"p\"> <span class=\"sfragment\" id=\"sfr_E6DA7B1D-6E92-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\"> <a href=\"/glossary/e/#estimated-residual-value\" class=\"term\" title=\"The estimated fair value of the leased property at the end of the lease term.\"><span>Estimated residual value</span></a> of the leased asset</span></span> </div> </li> <li class=\"li-norm\"><span class=\"linum\">d</span> <div class=\"p\"> <span class=\"sfragment\" id=\"sfr_E6DA7BD4-6E92-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">Unearned and deferred income.</span></span> </div> </li> </ol> </div> </div>","snippet":"A lessor shall record its investment in a leveraged lease. The net of the balances of the following accounts as measured in accordance with this Subtopic shall represent the lessor's initial and continuing investment in …","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:5ef10122a14a0897a8161e382d0561450ba5c9bea3b10a082eccb211aa4b73a7","downloaded_from":"2026-09-10T01:58:14.003Z","last_downloaded_at":"2026-09-10T01:58:14.003Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479295","source_sha256":"6691285f4592d371b22f1cab48c1b65908db9022ce7470262ce1eddf1434a820"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:3bc53caf5e92655c75ae0eb7ab2d9b8946213f0662a3c1bef8d9974cf1b98f51","downloaded_from":"2026-09-10T01:58:14.003Z","last_downloaded_at":"2026-09-10T01:58:14.003Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479295","source_sha256":"6691285f4592d371b22f1cab48c1b65908db9022ce7470262ce1eddf1434a820"}},{"block":null,"heading":"Leveraged Lease Acquired in a Business Combination or an Acquisition by a Not-for-Profit Entity","paragraphs":[{"citation":"842-50-25-2","para":"25-2","html":"<div class=\"asc-body\"><div class=\"norm-text\"> <span class=\"sfragment\" id=\"sfr_E6DA7C9F-6E92-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">In a business combination or an <a href=\"/glossary/a/#acquisition-by-a-not-for-profit-entity\" class=\"term\" title=\"A transaction or other event in which a not-for-profit acquirer obtains control of one or more nonprofit activities or businesses and initially recognizes their assets and liabilities in the acquirer's financial statements. When applicable guidance in Topic 805 is applied by a not-for-profit entity, the term business combination has the same meaning as this term has for a for-profit entity. Likewise, a reference to business combinations in guidance that links to Topic 805 has the same meaning as a reference to acquisitions by not-for-profit entities.\"><span>acquisition by a not-for-profit entity</span></a>, the acquiring entity shall retain the classification of the acquired entity's investment as 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> in a <a href=\"/glossary/l/#leveraged-lease\" class=\"term\" title=\"From the perspective of a lessor, a lease that was classified as a leveraged lease in accordance with the leases guidance in effect before the effective date and for which the commencement date is before the effective date.\"><span>leveraged lease</span></a> at the date of the combination. The net investment of the acquired leveraged lease shall be disaggregated into its component parts, namely net rentals receivable, <a href=\"/glossary/e/#estimated-residual-value\" class=\"term\" title=\"The estimated fair value of the leased property at the end of the lease term.\"><span>estimated residual value</span></a>, and unearned income including discount to adjust other components to present value.</span></span> </div> </div>","snippet":"In a business combination or an acquisition by a not-for-profit entity, the acquiring entity shall retain the classification of the acquired entity's investment as a lessor in a leveraged lease at the date of the combina…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:dcf5486765ef126e63678be1a6a9c3a9802a5129cbf724e32213a858e4ac4f4d","downloaded_from":"2026-09-10T01:58:14.003Z","last_downloaded_at":"2026-09-10T01:58:14.003Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479295","source_sha256":"6691285f4592d371b22f1cab48c1b65908db9022ce7470262ce1eddf1434a820"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:6c858352af35080d010d21029a72a4916d386e7fc7eea5498ac7beb05191dcaa","downloaded_from":"2026-09-10T01:58:14.003Z","last_downloaded_at":"2026-09-10T01:58:14.003Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479295","source_sha256":"6691285f4592d371b22f1cab48c1b65908db9022ce7470262ce1eddf1434a820"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:d6d6d1aff1ea242d159b738fda0edba6b1e16d4b591e396b2f0af0946dfd2a51","downloaded_from":"2026-09-10T01:58:14.003Z","last_downloaded_at":"2026-09-10T01:58:14.003Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479295","source_sha256":"6691285f4592d371b22f1cab48c1b65908db9022ce7470262ce1eddf1434a820"}},{"number":"30","label":"30 Initial Measurement","anchor":"30-initial-measurement","is_sec":false,"groups":[{"block":null,"heading":null,"paragraphs":[{"citation":"842-50-30-1","para":"30-1","html":"<div class=\"asc-body\"><div class=\"norm-text\"> <span class=\"sfragment\" id=\"sfr_E6EAC505-6E92-1014-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 initially measure its investment in a <a href=\"/glossary/l/#leveraged-lease\" class=\"term\" title=\"From the perspective of a lessor, a lease that was classified as a leveraged lease in accordance with the leases guidance in effect before the effective date and for which the commencement date is before the effective date.\"><span>leveraged lease</span></a> net of the nonrecourse debt (as discussed in paragraph <a href=\"/asc/842/50/#842-50-25-1\" class=\"xref\">842-50-25-1</a>). The net of the balances of the following accounts shall represent the initial and continuing investment in leveraged leases:</span></span> <ol class=\"ol-norm\"> <li class=\"li-norm\"><span class=\"linum\">a</span> <div class=\"p\"> <span class=\"sfragment\" id=\"sfr_E6EAC6C4-6E92-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">Rentals receivable, net of that portion of the rental applicable to principal and interest on the nonrecourse debt.</span></span> </div> </li> <li class=\"li-norm\"><span class=\"linum\">b</span> <div class=\"p\"> <span class=\"sfragment\" id=\"sfr_E6EAC8B5-6E92-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">A receivable for the amount of the investment tax credit to be realized on the transaction. </span></span> </div> </li> <li class=\"li-norm\"><span class=\"linum\">c</span> <div class=\"p\"> <span class=\"sfragment\" id=\"sfr_E6EACA5C-6E92-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">The <a href=\"/glossary/e/#estimated-residual-value\" class=\"term\" title=\"The estimated fair value of the leased property at the end of the lease term.\"><span>estimated residual value</span></a> of the leased asset. The estimated residual value shall not exceed the amount estimated at <a href=\"/glossary/l/#lease-inception\" class=\"term\" title=\"The date of the lease agreement or commitment, if earlier. For purposes of this definition, a commitment shall be in writing, signed by the parties in interest to the transaction, and shall specifically set forth the principal provisions of the transaction. If any of the principal provisions are yet to be negotiated, such a preliminary agreement or commitment does not qualify for purposes of this definition.\"><span>lease inception</span></a> except if the <a href=\"/glossary/l/#lease\" class=\"term\" title=\"A contract, or part of a contract, that conveys the right to control the use of identified property, plant, or equipment (an identified asset) for a period of time in exchange for consideration.\"><span>lease</span></a> agreement includes a provision to escalate <a href=\"/glossary/m/#minimum-lease-payments\" class=\"term\" title=\"Minimum lease payments comprise the payments that the lessee is obligated to make or can be required to make in connection with the leased property, excluding both of the following: Contingent rentals Any guarantee by the lessee of the lessor's debt and the lessee's obligation to pay (apart from the rental payments) executory costs such as insurance, maintenance, and taxes in connection with the leased property. If the lease contains a bargain purchase option, only the minimum rental payments over the lease term and the payment called for by the bargain purchase option are required to be included in the minimum lease payments. Otherwise, minimum lease payments include all of the following: The minimum rental payments called for by the lease over the lease term. Any guarantee of the residual value at the expiration of the lease term, whether or not payment of the guarantee constitutes a purchase of the leased property or of rental payments beyond the lease term by the lessee (including a third party related to the lessee) or a third party unrelated to either the lessee or the lessor, provided the third party is financially capable of discharging the obligations that may arise from the guarantee. If the lessor has the right to require the lessee to purchase the property at termination of the lease for a certain or determinable amount, that amount is required to be considered a lessee guarantee of the residual value. If the lessee agrees to make up any deficiency below a stated amount in the lessor's realization of the residual value, the residual value guarantee to be included in the minimum lease payments is required to be the stated amount, rather than an estimate of the deficiency to be made up. Any payment that the lessee must make or can be required to make upon failure to renew or extend the lease at the expiration of the lease term, whether or not the payment would constitute a purchase of the leased property. Note that the definition of lease term includes all periods, if any, for which failure to renew the lease imposes a penalty on the lessee in an amount such that renewal appears, at lease inception, to be reasonably assured. If the lease term has been extended because of that provision, the related penalty is not included in minimum lease payments. Payments made before the beginning of the lease term. The lessee is required to use the same interest rate to accrete payments to be made before the beginning of the lease term that it uses to discount lease payments to be made during the lease term. Fees that are paid by the lessee to the owners of the special-purpose entity for structuring the lease transaction. Such fees are required to be included as part of minimum lease payments (but not included in the fair value of the leased property). Lease payments that depend on a factor directly related to the future use of the leased property, such as machine hours of use or sales volume during the lease term, are contingent rentals and, accordingly, are excluded from minimum lease payments in their entirety. However, lease payments that depend on an existing index or rate, such as the Consumer Price Index or the prime interest rate, are required to be included in minimum lease payments based on the index or rate existing at lease inception; any increases or decreases in lease payments that result from subsequent changes in the index or rate are contingent rentals and, thus, affect the determination of income as accruable.\"><span>minimum lease payments</span></a> either for increases in construction or acquisition cost of the leased property or for increases in some other measure of cost or value (such as general price levels) during the construction or preacquisition period. In that case, the effect of any increases that have occurred shall be considered in the determination of the estimated residual value of 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> at lease inception.</span></span> </div> </li> <li class=\"li-norm\"><span class=\"linum\">d</span> <div class=\"p\"> <span class=\"sfragment\" id=\"sfr_E6EACD0F-6E92-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">Unearned and deferred income consisting of both of the following:</span></span> </div> <ol class=\"ol-norm\"> <li class=\"li-norm\"><span class=\"linum\">1</span> <div class=\"p\"> <span class=\"sfragment\" id=\"sfr_E6EAD141-6E92-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">The estimated pretax lease income (or loss), after deducting initial direct costs, remaining to be allocated to income over 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>.</span></span> </div> </li> <li class=\"li-norm\"><span class=\"linum\">2</span> <div class=\"p\"> <span class=\"sfragment\" id=\"sfr_E6EAD317-6E92-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">The investment tax credit remaining to be allocated to income over the lease term.</span></span> </div> </li> </ol> </li> </ol> </div> </div>","snippet":"A lessor shall initially measure its investment in a leveraged lease net of the nonrecourse debt (as discussed in paragraph 842-50-25-1). The net of the balances of the following accounts shall represent the initial and …","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:36a6a9267ca1e3e84004aeaced6fa3676e9e63d8c81018e9e9797b92d0caac88","downloaded_from":"2026-09-10T01:58:17.067Z","last_downloaded_at":"2026-09-10T01:58:17.067Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479193","source_sha256":"6aa9a7cc6f14a44bc81a961bf1053716ef337aba90521ce3925d05e0789d2bc5"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:5a7ba8628d05f3a7a1225c3b7090276b3ee599408c8267bc5b91ffc6d0fac604","downloaded_from":"2026-09-10T01:58:17.067Z","last_downloaded_at":"2026-09-10T01:58:17.067Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479193","source_sha256":"6aa9a7cc6f14a44bc81a961bf1053716ef337aba90521ce3925d05e0789d2bc5"}},{"block":null,"heading":"Leveraged Lease Acquired in a Business Combination or an Acquisition by a Not-for-Profit Entity","paragraphs":[{"citation":"842-50-30-2","para":"30-2","html":"<div class=\"asc-body\"><div class=\"norm-text\"> <span class=\"sfragment\" id=\"sfr_E6EAD4FE-6E92-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">In a business combination or an <a href=\"/glossary/a/#acquisition-by-a-not-for-profit-entity\" class=\"term\" title=\"A transaction or other event in which a not-for-profit acquirer obtains control of one or more nonprofit activities or businesses and initially recognizes their assets and liabilities in the acquirer's financial statements. When applicable guidance in Topic 805 is applied by a not-for-profit entity, the term business combination has the same meaning as this term has for a for-profit entity. Likewise, a reference to business combinations in guidance that links to Topic 805 has the same meaning as a reference to acquisitions by not-for-profit entities.\"><span>acquisition by a not-for-profit entity</span></a>, the acquiring entity shall assign an amount to the acquired net investment in the <a href=\"/glossary/l/#leveraged-lease\" class=\"term\" title=\"From the perspective of a lessor, a lease that was classified as a leveraged lease in accordance with the leases guidance in effect before the effective date and for which the commencement date is before the effective date.\"><span>leveraged lease</span></a> in accordance with the general guidance in Topic <a altsource=\"GUID-2E207482-2F2C-41D3-ADA4-A53A3509B10F.ditamap\" class=\"ditamap\">805</a> on business combinations, based on the remaining future cash flows and giving appropriate recognition to the estimated future tax effects of those cash flows.</span></span> </div> </div>","snippet":"In a business combination or an acquisition by a not-for-profit entity, the acquiring entity shall assign an amount to the acquired net investment in the leveraged lease in accordance with the general guidance in Topic 8…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:1239fc68480830a99be35ad248e72b4e1a781f22f87c7557329022cf34bb3156","downloaded_from":"2026-09-10T01:58:17.067Z","last_downloaded_at":"2026-09-10T01:58:17.067Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479193","source_sha256":"6aa9a7cc6f14a44bc81a961bf1053716ef337aba90521ce3925d05e0789d2bc5"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:0c7dafc50502aaeb2b8598a09bd647d812c494bd093e5950eb94a0256b48a855","downloaded_from":"2026-09-10T01:58:17.067Z","last_downloaded_at":"2026-09-10T01:58:17.067Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479193","source_sha256":"6aa9a7cc6f14a44bc81a961bf1053716ef337aba90521ce3925d05e0789d2bc5"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:a32f47f93a93fffd1cc85153863344c0113248d89087a3845c10a93d2717c517","downloaded_from":"2026-09-10T01:58:17.067Z","last_downloaded_at":"2026-09-10T01:58:17.067Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479193","source_sha256":"6aa9a7cc6f14a44bc81a961bf1053716ef337aba90521ce3925d05e0789d2bc5"}},{"number":"35","label":"35 Subsequent Measurement","anchor":"35-subsequent-measurement","is_sec":false,"groups":[{"block":null,"heading":"Leveraged Lease Acquired in a Business Combination or an Acquisition by a Not-for-Profit Entity","paragraphs":[{"citation":"842-50-35-1","para":"35-1","html":"<div class=\"asc-body\"><div class=\"norm-text\"> <span class=\"sfragment\" id=\"sfr_E6FECE9A-6E92-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">In a business combination or an <a href=\"/glossary/a/#acquisition-by-a-not-for-profit-entity\" class=\"term\" title=\"A transaction or other event in which a not-for-profit acquirer obtains control of one or more nonprofit activities or businesses and initially recognizes their assets and liabilities in the acquirer's financial statements. When applicable guidance in Topic 805 is applied by a not-for-profit entity, the term business combination has the same meaning as this term has for a for-profit entity. Likewise, a reference to business combinations in guidance that links to Topic 805 has the same meaning as a reference to acquisitions by not-for-profit entities.\"><span>acquisition by a not-for-profit entity</span></a>, the acquiring entity shall subsequently account for its acquired investment as 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> in a <a href=\"/glossary/l/#leveraged-lease\" class=\"term\" title=\"From the perspective of a lessor, a lease that was classified as a leveraged lease in accordance with the leases guidance in effect before the effective date and for which the commencement date is before the effective date.\"><span>leveraged lease</span></a> in accordance with the guidance in this Subtopic as it would for any other leveraged lease.</span></span> </div> </div>","snippet":"In a business combination or an acquisition by a not-for-profit entity, the acquiring entity shall subsequently account for its acquired investment as a lessor in a leveraged lease in accordance with the guidance in this…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:3b400b32de60753a2b15d267a65f4ccafb35eaf71859f3b984bb0d9ad7c6040c","downloaded_from":"2026-09-10T01:58:19.548Z","last_downloaded_at":"2026-09-10T01:58:19.548Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479116","source_sha256":"71b851cee8d5dbc356b775ab3c0e411f3cca4491bbf441fa0e09516e2743293a"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:2ef8fdbc6ef8abc5d03d8240add271cd81fa030b30ff79011385fe227c827fa2","downloaded_from":"2026-09-10T01:58:19.548Z","last_downloaded_at":"2026-09-10T01:58:19.548Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479116","source_sha256":"71b851cee8d5dbc356b775ab3c0e411f3cca4491bbf441fa0e09516e2743293a"}},{"block":null,"heading":"Income Recognition on a Leveraged Lease","paragraphs":[{"citation":"842-50-35-2","para":"35-2","html":"<div class=\"asc-body\"><div class=\"norm-text\"> <span class=\"sfragment\" id=\"sfr_E6FED01F-6E92-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">The investment in <a href=\"/glossary/l/#leveraged-lease\" class=\"term\" title=\"From the perspective of a lessor, a lease that was classified as a leveraged lease in accordance with the leases guidance in effect before the effective date and for which the commencement date is before the effective date.\"><span>leveraged leases</span></a> minus deferred taxes arising from differences between pretax accounting income and taxable income shall represent the <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's</span></a> net investment in leveraged leases for purposes of computing periodic net income from the leveraged lease. Given the original investment and using the projected cash receipts and disbursements over the term of the <a href=\"/glossary/l/#lease\" class=\"term\" title=\"A contract, or part of a contract, that conveys the right to control the use of identified property, plant, or equipment (an identified asset) for a period of time in exchange for consideration.\"><span>lease</span></a>, the rate of return on the net investment in the years in which it is positive shall be computed. The rate is that rate that, when applied to the net investment in the years in which the net investment is positive, will distribute the net income to those years and is distinct from the interest rate implicit in the lease. In each year, whether positive or not, the difference between the net cash flow and the amount of income recognized, if any, shall serve to increase or reduce the net investment balance. The use of the term <em class=\"ph i\">years</em> is not intended to preclude application of the accounting prescribed in this paragraph to shorter accounting periods.</span></span> </div> </div>","snippet":"The investment in leveraged leases minus deferred taxes arising from differences between pretax accounting income and taxable income shall represent the lessor's net investment in leveraged leases for purposes of computi…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:0aef6b2b8ef64adb51a14e9c9bc9eee6b162e9090f39d03b7396560b7ce83448","downloaded_from":"2026-09-10T01:58:19.548Z","last_downloaded_at":"2026-09-10T01:58:19.548Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479116","source_sha256":"71b851cee8d5dbc356b775ab3c0e411f3cca4491bbf441fa0e09516e2743293a"}},{"citation":"842-50-35-3","para":"35-3","html":"<div class=\"asc-body\"><div class=\"norm-text\"> <span class=\"sfragment\" id=\"sfr_E6FED15E-6E92-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">The net income (or loss) that a lessor recognizes on a leveraged lease shall be composed of the following three elements:</span></span> <ol class=\"ol-norm\"> <li class=\"li-norm\"><span class=\"linum\">a</span> <div class=\"p\"> <span class=\"sfragment\" id=\"sfr_E6FED268-6E92-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">Pretax lease income (or loss)</span></span> </div> </li> <li class=\"li-norm\"><span class=\"linum\">b</span> <div class=\"p\"> <span class=\"sfragment\" id=\"sfr_E6FED364-6E92-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">Investment tax credit</span></span> </div> </li> <li class=\"li-norm\"><span class=\"linum\">c</span> <div class=\"p\"> <span class=\"sfragment\" id=\"sfr_E6FED45B-6E92-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">Tax effect of pretax lease income (or loss).</span></span> </div> </li> </ol> </div> </div>","snippet":"The net income (or loss) that a lessor recognizes on a leveraged lease shall be composed of the following three elements:\n(a) Pretax lease income (or loss)\n(b) Investment tax credit\n(c) Tax effect of pretax lease income …","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:dcf82d47d01c5a1ef20ec127b45fb7691dea4196430009503423ac8cb1067b14","downloaded_from":"2026-09-10T01:58:19.548Z","last_downloaded_at":"2026-09-10T01:58:19.548Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479116","source_sha256":"71b851cee8d5dbc356b775ab3c0e411f3cca4491bbf441fa0e09516e2743293a"}},{"citation":"842-50-35-4","para":"35-4","html":"<div class=\"asc-body\"><div class=\"norm-text\"> <span class=\"sfragment\" id=\"sfr_E6FED55B-6E92-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">The pretax lease income (or loss) and investment tax credit elements shall be allocated in proportionate amounts from the unearned and deferred income included in the lessor's net investment (as described in paragraph <a href=\"/asc/842/50/#842-50-30-1\" class=\"xref\">842-50-30-1(d)</a>). The tax effect of the pretax lease income (or loss) recognized shall be reflected in tax expense for the year. The tax effect of the difference between pretax accounting income (or loss) and taxable income (or loss) for the year shall be charged or credited to deferred taxes.</span></span> </div> </div>","snippet":"The pretax lease income (or loss) and investment tax credit elements shall be allocated in proportionate amounts from the unearned and deferred income included in the lessor's net investment (as described in paragraph 84…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:f4231bf055e87ab9b0907c1fe2f1eb95dff62338127338a1182ca5b37f7d7b26","downloaded_from":"2026-09-10T01:58:19.548Z","last_downloaded_at":"2026-09-10T01:58:19.548Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479116","source_sha256":"71b851cee8d5dbc356b775ab3c0e411f3cca4491bbf441fa0e09516e2743293a"}},{"citation":"842-50-35-5","para":"35-5","html":"<div class=\"asc-body\"><div class=\"norm-text\"> <span class=\"sfragment\" id=\"sfr_E6FED668-6E92-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">If, at any time during 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> the application of the method prescribed in this Subtopic would result in a loss being allocated to future years, that loss shall be recognized immediately. This situation might arise in circumstances in which one of the important assumptions affecting net income is revised (see paragraphs <div class=\"xref-range displayInline\"><a href=\"/asc/842/50/#842-50-35-6\" class=\"xref\">842-50-35-6 through 35-15</a></div>).</span></span> </div> </div>","snippet":"If, at any time during the lease term the application of the method prescribed in this Subtopic would result in a loss being allocated to future years, that loss shall be recognized immediately. This situation might aris…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:47af9f6c829c9fe75d42b32c386327d2a84e8fdd583ea021194e05ad8766479d","downloaded_from":"2026-09-10T01:58:19.548Z","last_downloaded_at":"2026-09-10T01:58:19.548Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479116","source_sha256":"71b851cee8d5dbc356b775ab3c0e411f3cca4491bbf441fa0e09516e2743293a"}},{"citation":"842-50-35-6","para":"35-6","html":"<div class=\"asc-body\"><div class=\"norm-text\"> <span class=\"sfragment\" id=\"sfr_E6FED788-6E92-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">Any <a href=\"/glossary/e/#estimated-residual-value\" class=\"term\" title=\"The estimated fair value of the leased property at the end of the lease term.\"><span>estimated residual value</span></a> and all other important assumptions affecting estimated total net income from the <a href=\"/glossary/l/#leveraged-lease\" class=\"term\" title=\"From the perspective of a lessor, a lease that was classified as a leveraged lease in accordance with the leases guidance in effect before the effective date and for which the commencement date is before the effective date.\"><span>leveraged lease</span></a> shall be reviewed at least annually. The rate of return and the allocation of income to positive investment years shall be recalculated from <a href=\"/glossary/l/#lease-inception\" class=\"term\" title=\"The date of the lease agreement or commitment, if earlier. For purposes of this definition, a commitment shall be in writing, signed by the parties in interest to the transaction, and shall specifically set forth the principal provisions of the transaction. If any of the principal provisions are yet to be negotiated, such a preliminary agreement or commitment does not qualify for purposes of this definition.\"><span>lease inception</span></a> following the method described in paragraphs <div class=\"xref-range displayInline\"><a href=\"/asc/842/50/#842-50-35-2\" class=\"xref\">842-50-35-2 through 35-4</a></div> and using the revised assumption if, during 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>, any of the following conditions occur:</span></span> <ol class=\"ol-norm\"> <li class=\"li-norm\"><span class=\"linum\">a</span> <div class=\"p\"> <span class=\"sfragment\" id=\"sfr_E6FED8A3-6E92-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">The estimate of the residual value is determined to be excessive, and the decline in the residual value is judged to be other than temporary.</span></span> </div> </li> <li class=\"li-norm\"><span class=\"linum\">b</span> <div class=\"p\"> <span class=\"sfragment\" id=\"sfr_E6FED9C3-6E92-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">The revision of another important assumption changes the estimated total net income from the <a href=\"/glossary/l/#lease\" class=\"term\" title=\"A contract, or part of a contract, that conveys the right to control the use of identified property, plant, or equipment (an identified asset) for a period of time in exchange for consideration.\"><span>lease</span></a>.</span></span> </div> </li> <li class=\"li-norm\"><span class=\"linum\">c</span> <div class=\"p\"> <span class=\"sfragment\" id=\"sfr_E6FEDAE2-6E92-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">The projected timing of the income tax cash flows is revised.</span></span> </div> </li> </ol> </div> </div>","snippet":"Any estimated residual value and all other important assumptions affecting estimated total net income from the leveraged lease shall be reviewed at least annually. The rate of return and the allocation of income to posit…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:ba8040cd9a97c0169764a40b347266b8cb2c07ff87af369cf514d925f5913251","downloaded_from":"2026-09-10T01:58:19.548Z","last_downloaded_at":"2026-09-10T01:58:19.548Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479116","source_sha256":"71b851cee8d5dbc356b775ab3c0e411f3cca4491bbf441fa0e09516e2743293a"}},{"citation":"842-50-35-7","para":"35-7","html":"<div class=\"asc-body\"><div class=\"norm-text\"> <span class=\"sfragment\" id=\"sfr_E6FEDBFE-6E92-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">The <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 update all assumptions used to calculate total and periodic income if the lessor is performing a recalculation of the leveraged lease. That recalculation shall include actual cash flows up to the date of the recalculation and projected cash flows following the date of recalculation.</span></span> </div> </div>","snippet":"The lessor shall update all assumptions used to calculate total and periodic income if the lessor is performing a recalculation of the leveraged lease. That recalculation shall include actual cash flows up to the date of…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:66bd238aff17deda27ecb78b26d97a140bc720850afda966b239c574bc53ea0b","downloaded_from":"2026-09-10T01:58:19.548Z","last_downloaded_at":"2026-09-10T01:58:19.548Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479116","source_sha256":"71b851cee8d5dbc356b775ab3c0e411f3cca4491bbf441fa0e09516e2743293a"}},{"citation":"842-50-35-8","para":"35-8","html":"<div class=\"asc-body\"><div class=\"norm-text\"> <span class=\"sfragment\" id=\"sfr_E6FEDD14-6E92-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">The accounts constituting the net investment balance shall be adjusted to conform to the recalculated balances, and the change in the net investment shall be recognized as a gain or loss in the year in which the assumption is changed. The gain or loss shall be recognized as follows:</span></span> <ol class=\"ol-norm\"> <li class=\"li-norm\"><span class=\"linum\">a</span> <div class=\"p\"> <span class=\"sfragment\" id=\"sfr_E6FEDE1E-6E92-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">The pretax gain or loss shall be included in income from continuing operations before income taxes in the same line item in which leveraged lease income is recognized.</span></span> </div> </li> <li class=\"li-norm\"><span class=\"linum\">b</span> <div class=\"p\"> <span class=\"sfragment\" id=\"sfr_E6FEDF39-6E92-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">The tax effect of the gain or loss shall be included in the income tax line item.</span></span> </div> </li> <li class=\"li-norm\"><span class=\"linum\">c</span> <div class=\"p\"> <span class=\"sfragment\" id=\"sfr_E6FEE085-6E92-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">An upward adjustment of the estimated residual value (including any guaranteed portion) shall not be made.</span></span> </div> </li> </ol> </div> </div>","snippet":"The accounts constituting the net investment balance shall be adjusted to conform to the recalculated balances, and the change in the net investment shall be recognized as a gain or loss in the year in which the assumpti…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:187aac2fbc40adb13348e4143f8f03a7fc696c3ff31a8d21719606650e371ddf","downloaded_from":"2026-09-10T01:58:19.548Z","last_downloaded_at":"2026-09-10T01:58:19.548Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479116","source_sha256":"71b851cee8d5dbc356b775ab3c0e411f3cca4491bbf441fa0e09516e2743293a"}},{"citation":"842-50-35-9","para":"35-9","html":"<div class=\"asc-body\"><div class=\"norm-text\"> <span class=\"sfragment\" id=\"sfr_E6FEE191-6E92-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">The projected timing of income tax cash flows generated by the leveraged lease is an important assumption and shall be reviewed annually, or more frequently, if events or changes in circumstances indicate that a change in timing has occurred or is projected to occur. The income effect of a change in the income tax rate shall be recognized in the first accounting period ending on or after the date on which the legislation effecting a rate change becomes law.</span></span> </div> </div>","snippet":"The projected timing of income tax cash flows generated by the leveraged lease is an important assumption and shall be reviewed annually, or more frequently, if events or changes in circumstances indicate that a change i…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:d30da50256c3d2831386b59fc084d91cc1f530ee9a9bdf55025949b3664769d4","downloaded_from":"2026-09-10T01:58:19.548Z","last_downloaded_at":"2026-09-10T01:58:19.548Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479116","source_sha256":"71b851cee8d5dbc356b775ab3c0e411f3cca4491bbf441fa0e09516e2743293a"}},{"citation":"842-50-35-10","para":"35-10","html":"<div class=\"asc-body\"><div class=\"norm-text\"> <span class=\"sfragment\" id=\"sfr_E6FEE2A2-6E92-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">A revision of the projected timing of the income tax cash flows applies only to changes or projected changes in the timing of income taxes that are directly related to the leveraged lease transaction. For example, a change in timing or projected timing of the tax benefits generated by a leveraged lease as a result of any of the following circumstances would require a recalculation because that change in timing is directly related to that lease:</span></span> <ol class=\"ol-norm\"> <li class=\"li-norm\"><span class=\"linum\">a</span> <div class=\"p\"> <span class=\"sfragment\" id=\"sfr_E6FEE3AB-6E92-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">An interpretation of the tax law</span></span> </div> </li> <li class=\"li-norm\"><span class=\"linum\">b</span> <div class=\"p\"> <span class=\"sfragment\" id=\"sfr_E6FEE4AF-6E92-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">A change in the lessor's assessment of the likelihood of prevailing in a challenge by the taxing authority</span></span> </div> </li> <li class=\"li-norm\"><span class=\"linum\">c</span> <div class=\"p\"> <span class=\"sfragment\" id=\"sfr_E6FEE59F-6E92-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">A change in the lessor's expectations about settlement with the taxing authority.</span></span> </div> </li> </ol> </div> </div>","snippet":"A revision of the projected timing of the income tax cash flows applies only to changes or projected changes in the timing of income taxes that are directly related to the leveraged lease transaction. For example, a chan…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:5563fbd983896ddf998071e522fd13a56a9b04fc55c45452046d2bf0872048cb","downloaded_from":"2026-09-10T01:58:19.548Z","last_downloaded_at":"2026-09-10T01:58:19.548Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479116","source_sha256":"71b851cee8d5dbc356b775ab3c0e411f3cca4491bbf441fa0e09516e2743293a"}},{"citation":"842-50-35-11","para":"35-11","html":"<div class=\"asc-body\"><div class=\"norm-text\"> <span class=\"sfragment\" id=\"sfr_E6FEE6AC-6E92-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">In contrast, as discussed in paragraph <a href=\"/asc/842/50/#842-50-35-20\" class=\"xref\">842-50-35-20</a>, a change in timing of income taxes solely as a result of an alternative minimum tax credit or insufficient taxable income of the lessor would not require a recalculation of a leveraged lease because that change in timing is not directly related to that lease. A recalculation would not be required unless there is an indication that the previous assumptions about total after-tax net income from the leveraged lease were no longer valid.</span></span> </div> </div>","snippet":"In contrast, as discussed in paragraph 842-50-35-20, a change in timing of income taxes solely as a result of an alternative minimum tax credit or insufficient taxable income of the lessor would not require a recalculati…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:b35a5a69fbee17fdd6c430a0b038ef5275023990b934bcf8c45b9223a3a73f82","downloaded_from":"2026-09-10T01:58:19.548Z","last_downloaded_at":"2026-09-10T01:58:19.548Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479116","source_sha256":"71b851cee8d5dbc356b775ab3c0e411f3cca4491bbf441fa0e09516e2743293a"}},{"citation":"842-50-35-12","para":"35-12","html":"<div class=\"asc-body\"><div class=\"norm-text\"> <span class=\"sfragment\" id=\"sfr_E6FEE7C1-6E92-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">Tax positions shall be reflected in the lessor's initial calculation or subsequent recalculation on the recognition, measurement, and derecognition criteria in paragraphs <a href=\"/asc/740/10/#740-10-25-6\" class=\"xref\">740-10-25-6</a>, <a href=\"/asc/740/10/#740-10-30-7\" class=\"xref\">740-10-30-7</a>, and <a href=\"/asc/740/10/#740-10-40-2\" class=\"xref\">740-10-40-2</a>. The determination of when a tax position no longer meets those criteria is a matter of individual facts and circumstances evaluated in light of all available evidence.</span></span> </div> </div>","snippet":"Tax positions shall be reflected in the lessor's initial calculation or subsequent recalculation on the recognition, measurement, and derecognition criteria in paragraphs 740-10-25-6, 740-10-30-7, and 740-10-40-2. The de…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:e8fb9b7c20e144df4a9269ba99cad7293c0d8dff7e0d9b8a05598acf81e88c99","downloaded_from":"2026-09-10T01:58:19.548Z","last_downloaded_at":"2026-09-10T01:58:19.548Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479116","source_sha256":"71b851cee8d5dbc356b775ab3c0e411f3cca4491bbf441fa0e09516e2743293a"}},{"citation":"842-50-35-13","para":"35-13","html":"<div class=\"asc-body\"><div class=\"norm-text\"> <span class=\"sfragment\" id=\"sfr_E6FEE8DB-6E92-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">If the lessor expects to enter into a settlement of a tax position relating to a leveraged lease with a taxing authority, the cash flows following the date of recalculation shall include projected cash flows between the date of the recalculation and the date of any projected settlement and a projected settlement amount at the date of the projected settlement.</span></span> </div> </div>","snippet":"If the lessor expects to enter into a settlement of a tax position relating to a leveraged lease with a taxing authority, the cash flows following the date of recalculation shall include projected cash flows between the …","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:f31f79dd995d908baad0bd660afa7c4a5ca720ee66cc7c8d04e48e3369828257","downloaded_from":"2026-09-10T01:58:19.548Z","last_downloaded_at":"2026-09-10T01:58:19.548Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479116","source_sha256":"71b851cee8d5dbc356b775ab3c0e411f3cca4491bbf441fa0e09516e2743293a"}},{"citation":"842-50-35-14","para":"35-14","html":"<div class=\"asc-body\"><div class=\"norm-text\"> <span class=\"sfragment\" id=\"sfr_E6FEE9CF-6E92-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">The recalculation of income from the leveraged lease shall not include interest or penalties in the cash flows from the leveraged lease.</span></span> </div> </div>","snippet":"The recalculation of income from the leveraged lease shall not include interest or penalties in the cash flows from the leveraged lease.","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:b9bbdf1a7eccf3db7e794f227226b757ac781ab9295746e7dc4b16213c7197c5","downloaded_from":"2026-09-10T01:58:19.548Z","last_downloaded_at":"2026-09-10T01:58:19.548Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479116","source_sha256":"71b851cee8d5dbc356b775ab3c0e411f3cca4491bbf441fa0e09516e2743293a"}},{"citation":"842-50-35-15","para":"35-15","html":"<div class=\"asc-body\"><div class=\"norm-text\"> <span class=\"sfragment\" id=\"sfr_E6FEEABC-6E92-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">Advance payments and deposits made with a taxing authority shall not be considered an actual cash flow of the leveraged lease; rather, those payments and deposits shall be included in the projected settlement amount.</span></span> </div> </div>","snippet":"Advance payments and deposits made with a taxing authority shall not be considered an actual cash flow of the leveraged lease; rather, those payments and deposits shall be included in the projected settlement amount.","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:0bcb6664b5256cff97d46d5f441f111ace01adc618f22b568ac7a2f7aed50778","downloaded_from":"2026-09-10T01:58:19.548Z","last_downloaded_at":"2026-09-10T01:58:19.548Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479116","source_sha256":"71b851cee8d5dbc356b775ab3c0e411f3cca4491bbf441fa0e09516e2743293a"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:1208edfbda936080676ca1814ecd2cdacff50cba31f48d3737120539184bf4c4","downloaded_from":"2026-09-10T01:58:19.548Z","last_downloaded_at":"2026-09-10T01:58:19.548Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479116","source_sha256":"71b851cee8d5dbc356b775ab3c0e411f3cca4491bbf441fa0e09516e2743293a"}},{"block":null,"heading":"Effect of Alternative Minimum Tax","paragraphs":[{"citation":"842-50-35-16","para":"35-16","html":"<div class=\"asc-body\"><div class=\"norm-text\"> <span class=\"sfragment\" id=\"sfr_E6FEEC9C-6E92-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">An entity shall include assumptions about the effect of the alternative minimum tax, considering its consolidated tax position, in <a href=\"/glossary/l/#leveraged-lease\" class=\"term\" title=\"From the perspective of a lessor, a lease that was classified as a leveraged lease in accordance with the leases guidance in effect before the effective date and for which the commencement date is before the effective date.\"><span>leveraged lease</span></a> computations.</span></span> </div> </div>","snippet":"An entity shall include assumptions about the effect of the alternative minimum tax, considering its consolidated tax position, in leveraged lease computations.","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:f5119705dbc47b89eefe300fc395d9f52868f6893b5b7090d048d6ba1f467df8","downloaded_from":"2026-09-10T01:58:19.548Z","last_downloaded_at":"2026-09-10T01:58:19.548Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479116","source_sha256":"71b851cee8d5dbc356b775ab3c0e411f3cca4491bbf441fa0e09516e2743293a"}},{"citation":"842-50-35-17","para":"35-17","html":"<div class=\"asc-body\"><div class=\"norm-text\"> <span class=\"sfragment\" id=\"sfr_E6FEEDB6-6E92-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">Any difference between alternative minimum tax depreciation and the tax depreciation assumed in the leveraged lease or between income recognition for financial reporting purposes and alternative minimum tax income could, depending on the <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's</span></a> overall tax situation, result in alternative minimum tax or the utilization of alternative minimum tax credits.</span></span> </div> </div>","snippet":"Any difference between alternative minimum tax depreciation and the tax depreciation assumed in the leveraged lease or between income recognition for financial reporting purposes and alternative minimum tax income could,…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:6cde3d7f9ef1f3c654771a5bbfdd8669c3b9e5f4b13fbb85c6a99db922aa0a09","downloaded_from":"2026-09-10T01:58:19.548Z","last_downloaded_at":"2026-09-10T01:58:19.548Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479116","source_sha256":"71b851cee8d5dbc356b775ab3c0e411f3cca4491bbf441fa0e09516e2743293a"}},{"citation":"842-50-35-18","para":"35-18","html":"<div class=\"asc-body\"><div class=\"norm-text\"> <span class=\"sfragment\" id=\"sfr_E6FEEE9F-6E92-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">If alternative minimum tax is paid or an alternative minimum tax credit is utilized, the total cash flows from the leveraged lease could be changed and the lessor's net investment in the leveraged lease and income recognition would be affected.</span></span> </div> </div>","snippet":"If alternative minimum tax is paid or an alternative minimum tax credit is utilized, the total cash flows from the leveraged lease could be changed and the lessor's net investment in the leveraged lease and income recogn…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:29e8dc4759117236fc291e1509bec4811713edd7857173793a3bdc8739a943a3","downloaded_from":"2026-09-10T01:58:19.548Z","last_downloaded_at":"2026-09-10T01:58:19.548Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479116","source_sha256":"71b851cee8d5dbc356b775ab3c0e411f3cca4491bbf441fa0e09516e2743293a"}},{"citation":"842-50-35-19","para":"35-19","html":"<div class=\"asc-body\"><div class=\"norm-text\"> <span class=\"sfragment\" id=\"sfr_E6FEEF96-6E92-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">If a change to the tax assumptions changes total estimated after-tax net income, the rate of return on the leveraged lease shall be recalculated from inception, the accounts constituting the lessor's net investment shall be adjusted, and a gain or loss shall be recognized in the year in which the assumption is changed.</span></span> </div> </div>","snippet":"If a change to the tax assumptions changes total estimated after-tax net income, the rate of return on the leveraged lease shall be recalculated from inception, the accounts constituting the lessor's net investment shall…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:189d9f9dc376baa9e97c11097d1b50cf6a65e008540370d39ba06196e5285b03","downloaded_from":"2026-09-10T01:58:19.548Z","last_downloaded_at":"2026-09-10T01:58:19.548Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479116","source_sha256":"71b851cee8d5dbc356b775ab3c0e411f3cca4491bbf441fa0e09516e2743293a"}},{"citation":"842-50-35-20","para":"35-20","html":"<div class=\"asc-body\"><div class=\"norm-text\"> <span class=\"sfragment\" id=\"sfr_E6FEF085-6E92-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">However, an entity whose tax position frequently varies between alternative minimum tax and regular tax shall not be required to recalculate the rate of return on the leveraged lease each year unless there is an indication that the original assumptions regarding total after-tax net income from the <a href=\"/glossary/l/#lease\" class=\"term\" title=\"A contract, or part of a contract, that conveys the right to control the use of identified property, plant, or equipment (an identified asset) for a period of time in exchange for consideration.\"><span>lease</span></a> are no longer valid. In that circumstance, the entity shall be required to revise the leveraged lease computations in any period in which total net income from the leveraged lease changes because of the effect of the alternative minimum tax on cash flows for the lease.</span></span> </div> </div>","snippet":"However, an entity whose tax position frequently varies between alternative minimum tax and regular tax shall not be required to recalculate the rate of return on the leveraged lease each year unless there is an indicati…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:2bf9b02f8ee293db01e32685257e6a0db81e57f847709142bd458817445dce66","downloaded_from":"2026-09-10T01:58:19.548Z","last_downloaded_at":"2026-09-10T01:58:19.548Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479116","source_sha256":"71b851cee8d5dbc356b775ab3c0e411f3cca4491bbf441fa0e09516e2743293a"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:8893d8c62c47502bcee26cc2d7d22b1c0b05b2d278543246777aa93790ac51db","downloaded_from":"2026-09-10T01:58:19.548Z","last_downloaded_at":"2026-09-10T01:58:19.548Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479116","source_sha256":"71b851cee8d5dbc356b775ab3c0e411f3cca4491bbf441fa0e09516e2743293a"}},{"block":null,"heading":"Transfer of Minimum Rental Payments","paragraphs":[{"citation":"842-50-35-21","para":"35-21","html":"<div class=\"asc-body\"><div class=\"norm-text\"> <span class=\"sfragment\" id=\"sfr_E6FEF182-6E92-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">If 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> sells substantially all of the minimum rental payments associated with a <a href=\"/glossary/l/#leveraged-lease\" class=\"term\" title=\"From the perspective of a lessor, a lease that was classified as a leveraged lease in accordance with the leases guidance in effect before the effective date and for which the commencement date is before the effective date.\"><span>leveraged lease</span></a> and retains an interest in the residual value of the leased asset, the lessor shall not recognize increases in the value of the <a href=\"/glossary/l/#lease\" class=\"term\" title=\"A contract, or part of a contract, that conveys the right to control the use of identified property, plant, or equipment (an identified asset) for a period of time in exchange for consideration.\"><span>lease</span></a> residual to its estimated value over the remaining <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>. The lessor shall report any remaining interest thereafter at its carrying amount at the date of the sale of 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>. If it is determined subsequently that the <a href=\"/glossary/f/#fair-value\" class=\"term\" title=\"The price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.\"><span>fair value</span></a> of the residual value of the leased asset has declined below the carrying amount of the interest retained and that decline is other than temporary, the asset shall be written down to fair value, and the amount of the write-down shall be recognized as a loss. That fair value becomes the asset's new carrying amount, and the asset shall not be increased for any subsequent increase in its fair value before its sale or disposition.</span></span> </div> </div>","snippet":"If a lessor sells substantially all of the minimum rental payments associated with a leveraged lease and retains an interest in the residual value of the leased asset, the lessor shall not recognize increases in the valu…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:77ad3e8d44694652ee2380ca9a4db0f1e987b43e5b197e5cf2bb26afec2cbc2a","downloaded_from":"2026-09-10T01:58:19.548Z","last_downloaded_at":"2026-09-10T01:58:19.548Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479116","source_sha256":"71b851cee8d5dbc356b775ab3c0e411f3cca4491bbf441fa0e09516e2743293a"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:8b2397e9d356726cfb549ebb7d686343c5fc37d788395138a4af13f2ca3d5471","downloaded_from":"2026-09-10T01:58:19.548Z","last_downloaded_at":"2026-09-10T01:58:19.548Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479116","source_sha256":"71b851cee8d5dbc356b775ab3c0e411f3cca4491bbf441fa0e09516e2743293a"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:6bdb3ce916d358df732f0fc1636f15b97bb842b848aeeef8f8974a95bf5ae285","downloaded_from":"2026-09-10T01:58:19.548Z","last_downloaded_at":"2026-09-10T01:58:19.548Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479116","source_sha256":"71b851cee8d5dbc356b775ab3c0e411f3cca4491bbf441fa0e09516e2743293a"}},{"number":"45","label":"45 Other Presentation Matters","anchor":"45-other-presentation-matters","is_sec":false,"groups":[{"block":null,"heading":null,"paragraphs":[{"citation":"842-50-45-1","para":"45-1","html":"<div class=\"asc-body\"><div class=\"norm-text\"><span class=\"sfragment\" id=\"sfr_E70DEF3D-6E92-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">For purposes of presenting the investment in a <a href=\"/glossary/l/#leveraged-lease\" class=\"term\" title=\"From the perspective of a lessor, a lease that was classified as a leveraged lease in accordance with the leases guidance in effect before the effective date and for which the commencement date is before the effective date.\"><span>leveraged lease</span></a> in the <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's</span></a> balance sheet, the amount of related deferred taxes shall be presented separately (from the remainder of the net investment). In the income statement or the notes to that statement, separate presentation (from each other) shall be made of pretax income from the leveraged lease, the tax effect of pretax income, and the amount of investment tax credit recognized as income during the period.</span></span></div></div>","snippet":"For purposes of presenting the investment in a leveraged lease in the lessor's balance sheet, the amount of related deferred taxes shall be presented separately (from the remainder of the net investment). In the income s…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:281d1147c86693f6b4d6d09e0464060daff59a1e3364da1d57ce8faf2a475b90","downloaded_from":"2026-09-10T01:58:21.856Z","last_downloaded_at":"2026-09-10T01:58:21.856Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147478989","source_sha256":"a46b7cca2a8ac67cc74c32b13be1a2d864d3de1464250a2d0040b033b44eadda"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:1a751d480898efc1418759348ec27d5aeee1f69c65807280ec2158b803c64ef0","downloaded_from":"2026-09-10T01:58:21.856Z","last_downloaded_at":"2026-09-10T01:58:21.856Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147478989","source_sha256":"a46b7cca2a8ac67cc74c32b13be1a2d864d3de1464250a2d0040b033b44eadda"}},{"block":null,"heading":"Income Taxes and Leveraged Leases","paragraphs":[{"citation":"842-50-45-2","para":"45-2","html":"<div class=\"asc-body\"><div class=\"norm-text\"><span class=\"sfragment\" id=\"sfr_E70DF0BC-6E92-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">Integration of the results of income tax accounting for <a href=\"/glossary/l/#leveraged-lease\" class=\"term\" title=\"From the perspective of a lessor, a lease that was classified as a leveraged lease in accordance with the leases guidance in effect before the effective date and for which the commencement date is before the effective date.\"><span>leveraged leases</span></a> with the other results of accounting for income taxes under Topic <a altsource=\"GUID-536ACE12-AE3B-4036-B02C-E0B2A90A3E70.ditamap\" class=\"ditamap\">740</a> on income taxes is required if deferred tax credits related to leveraged leases are the only source (see paragraph <a href=\"/asc/740/10/#740-10-30-18\" class=\"xref\">740-10-30-18</a>) for recognition of a tax benefit for deductible temporary differences and carryforwards not related to leveraged leases. A valuation allowance is not necessary if deductible temporary differences and carryforwards will offset taxable amounts from future recovery of the net investment in the leveraged lease. However, to the extent that the amount of deferred tax credits for a leveraged lease as determined in accordance with this Subtopic differs from the amount of the deferred tax liability related to the leveraged lease that would otherwise result from applying the guidance in Topic <a altsource=\"GUID-536ACE12-AE3B-4036-B02C-E0B2A90A3E70.ditamap\" class=\"ditamap\">740</a>, that difference is preserved and is not a source of taxable income for recognition of the tax benefit of deductible temporary differences and operating loss or tax credit carryforwards.</span></span></div></div>","snippet":"Integration of the results of income tax accounting for leveraged leases with the other results of accounting for income taxes under Topic 740 on income taxes is required if deferred tax credits related to leveraged leas…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:92212558f79a13155228bc5de66362cfd45deff9f0a2118c51deaa29a268acd2","downloaded_from":"2026-09-10T01:58:21.856Z","last_downloaded_at":"2026-09-10T01:58:21.856Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147478989","source_sha256":"a46b7cca2a8ac67cc74c32b13be1a2d864d3de1464250a2d0040b033b44eadda"}},{"citation":"842-50-45-3","para":"45-3","html":"<div class=\"asc-body\"><div class=\"norm-text\"><div class=\"norm-text\"><span class=\"sfragment\" id=\"GUID-83BE5290-6C6F-46EF-B97B-1725B859EF87\"><span class=\"sfragment-source\">This Subtopic requires that the tax effect of any difference between the assigned value and the tax basis of a leveraged lease at the date of a business combination, an <a href=\"/glossary/a/#acquisition-by-a-not-for-profit-entity\" class=\"term\" title=\"A transaction or other event in which a not-for-profit acquirer obtains control of one or more nonprofit activities or businesses and initially recognizes their assets and liabilities in the acquirer's financial statements. When applicable guidance in Topic 805 is applied by a not-for-profit entity, the term business combination has the same meaning as this term has for a for-profit entity. Likewise, a reference to business combinations in guidance that links to Topic 805 has the same meaning as a reference to acquisitions by not-for-profit entities.\"><span>acquisition by a not-for-profit entity</span></a>, </span></span><span class=\"sfragment\" id=\"GUID-0E7626F0-7ABE-4382-A1A8-4AF187807DBD\"><span class=\"sfragment-source\">or a <a href=\"/glossary/j/#joint-venture\" class=\"term\" title=\"An entity owned and operated by a small group of businesses (the joint venturers) as a separate and specific business or project for the mutual benefit of the members of the group. A government may also be a member of the group. The purpose of a joint venture frequently is to share risks and rewards in developing a new market, product, or technology; to combine complementary technological knowledge; or to pool resources in developing production or other facilities. A joint venture also usually provides an arrangement under which each joint venturer may participate, directly or indirectly, in the overall management of the joint venture. Joint venturers thus have an interest or relationship other than as passive investors. An entity that is a subsidiary of one of the joint venturers is not a joint venture. The ownership of a joint venture seldom changes, and its equity interests usually are not traded publicly. A minority public ownership, however, does not preclude an entity from being a joint venture. As distinguished from a corporate joint venture, a joint venture is not limited to corporate entities.\"><span>joint venture</span></a> formation </span></span><span class=\"sfragment\" id=\"GUID-868BD1BE-2FF9-429F-AC86-265A9DB0C6A4\"><span class=\"sfragment-source\">shall not be accounted for as a deferred tax credit. Any tax effects included in unearned and deferred income as required by this Subtopic shall not be offset by the deferred tax consequences of other temporary differences or by the tax benefit of operating loss or tax credit carryforwards. However, deferred tax credits that arise after the date of a combination shall be accounted for in the same manner as for leveraged leases that were not acquired in a combination.</span></span></div></div></div>","snippet":"This Subtopic requires that the tax effect of any difference between the assigned value and the tax basis of a leveraged lease at the date of a business combination, an acquisition by a not-for-profit entity, or a joint …","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:51933b46e702aab9bcf17c14aa394c80f0f3c14cdb034e668ae8d24290db3713","downloaded_from":"2026-09-10T01:58:21.856Z","last_downloaded_at":"2026-09-10T01:58:21.856Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147478989","source_sha256":"a46b7cca2a8ac67cc74c32b13be1a2d864d3de1464250a2d0040b033b44eadda"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:a5d812d997287250118e916f29499112d5117904f66724d3badfa4f785041153","downloaded_from":"2026-09-10T01:58:21.856Z","last_downloaded_at":"2026-09-10T01:58:21.856Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147478989","source_sha256":"a46b7cca2a8ac67cc74c32b13be1a2d864d3de1464250a2d0040b033b44eadda"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:4ae6b4ec48a9de3d195afa1ffa0630be90b957abb20ea3c720e713ca1a3ed000","downloaded_from":"2026-09-10T01:58:21.856Z","last_downloaded_at":"2026-09-10T01:58:21.856Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147478989","source_sha256":"a46b7cca2a8ac67cc74c32b13be1a2d864d3de1464250a2d0040b033b44eadda"}},{"number":"50","label":"50 Disclosure","anchor":"50-disclosure","is_sec":false,"groups":[{"block":null,"heading":null,"paragraphs":[{"citation":"842-50-50-1","para":"50-1","html":"<div class=\"asc-body\"><div class=\"norm-text\"><span class=\"sfragment\" id=\"sfr_E720CBEB-6E92-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">If leveraged leasing is a significant part of the <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's</span></a> business activities in terms of revenue, net income, or assets, the components of the net investment balance in <a href=\"/glossary/l/#leveraged-lease\" class=\"term\" title=\"From the perspective of a lessor, a lease that was classified as a leveraged lease in accordance with the leases guidance in effect before the effective date and for which the commencement date is before the effective date.\"><span>leveraged leases</span></a> as set forth in paragraph <a href=\"/asc/842/50/#842-50-25-1\" class=\"xref\">842-50-25-1</a> shall be disclosed in the notes to financial statements.</span></span></div></div>","snippet":"If leveraged leasing is a significant part of the lessor's business activities in terms of revenue, net income, or assets, the components of the net investment balance in leveraged leases as set forth in paragraph 842-50…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:8227e7f5c385422b7091ada11a81fcf71d079b2ab0ac56abe786f02f44291685","downloaded_from":"2026-09-10T01:58:25.544Z","last_downloaded_at":"2026-09-10T01:58:25.544Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479711","source_sha256":"f4b2a1b08f172b33977c946451a1df7ada58d2167fd1f2cf5cdbfa7b169528b2"}},{"citation":"842-50-50-2","para":"50-2","html":"<div class=\"asc-body\"><div class=\"norm-text\"><span class=\"sfragment\" id=\"GUID-BBA8F821-DEC2-4854-A68E-78C4AAC86F37\"><span class=\"sfragment-source\">For guidance on disclosures about financing receivables, which include receivables relating to a lessor's rights to payments from leveraged leases, see the guidance in Subtopic <a altsource=\"GUID-B92DF57A-D31A-4A52-999E-127107B41EED.ditamap\" class=\"ditamap\">326-20</a> on financial instruments measured at amortized cost.</span></span></div></div>","snippet":"For guidance on disclosures about financing receivables, which include receivables relating to a lessor's rights to payments from leveraged leases, see the guidance in Subtopic 326-20 on financial instruments measured at…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:180200cdaac56e7c31e851bc7efd8d459fefd95e8df2f9f4b245e657dfc3caae","downloaded_from":"2026-09-10T01:58:25.544Z","last_downloaded_at":"2026-09-10T01:58:25.544Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479711","source_sha256":"f4b2a1b08f172b33977c946451a1df7ada58d2167fd1f2cf5cdbfa7b169528b2"}},{"citation":"842-50-50-3","para":"50-3","html":"<div class=\"asc-body\"><div class=\"norm-text\"><span class=\"sfragment\" id=\"sfr_E720CEB5-6E92-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">If accounting for the effect on leveraged leases of the change in tax rates results in a significant variation from the customary relationship between income tax expense and pretax accounting income and the reason for that variation is not otherwise apparent, the lessor shall disclose the reason for that variation.</span></span></div></div>","snippet":"If accounting for the effect on leveraged leases of the change in tax rates results in a significant variation from the customary relationship between income tax expense and pretax accounting income and the reason for th…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:e8a694e0d7cc37a3ffa2f054343a9507a037a089fcc9da9952939fc345ebf397","downloaded_from":"2026-09-10T01:58:25.544Z","last_downloaded_at":"2026-09-10T01:58:25.544Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479711","source_sha256":"f4b2a1b08f172b33977c946451a1df7ada58d2167fd1f2cf5cdbfa7b169528b2"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:f9fbc99b0c5a91465bea7e4a9c23fd7a9387b3e40f2d89820c9b5ea5ee6b5dc5","downloaded_from":"2026-09-10T01:58:25.544Z","last_downloaded_at":"2026-09-10T01:58:25.544Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479711","source_sha256":"f4b2a1b08f172b33977c946451a1df7ada58d2167fd1f2cf5cdbfa7b169528b2"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:232fad3c6f3380da1bc123facade90979f075d97cf60bd410282e747f54ad5be","downloaded_from":"2026-09-10T01:58:25.544Z","last_downloaded_at":"2026-09-10T01:58:25.544Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479711","source_sha256":"f4b2a1b08f172b33977c946451a1df7ada58d2167fd1f2cf5cdbfa7b169528b2"}},{"number":"55","label":"55 Implementation Guidance and Illustrations","anchor":"55-implementation-guidance-and-illustrations","is_sec":false,"groups":[{"block":null,"heading":"Implementation Guidance","paragraphs":[{"citation":"842-50-55-1","para":"55-1","html":"<div class=\"asc-body\"><div class=\"norm-text\"> <span class=\"sfragment\" id=\"sfr_E74F49AB-6E92-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">Although the carrying amount of an asset acquired previously may not differ significantly from its <a href=\"/glossary/f/#fair-value\" class=\"term\" title=\"The price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.\"><span>fair value</span></a>, it is unlikely that the two will be the same. However, regulated utilities have argued that the carrying amounts of certain of their assets always equal the fair value based on the utility's ability to recover that cost in conjunction with a franchise to sell a related service in a specified area. That argument is not valid when considering the value of the asset to a third-party purchaser that does not own that franchise.</span></span> </div> </div>","snippet":"Although the carrying amount of an asset acquired previously may not differ significantly from its fair value, it is unlikely that the two will be the same. However, regulated utilities have argued that the carrying amou…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:59aa6e5cca111ddc8d46a5239ed50f95146dfd26de6aa3c2555f513cf0b60875","downloaded_from":"2026-09-10T01:58:27.334Z","last_downloaded_at":"2026-09-10T01:58:27.334Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479679","source_sha256":"6f80143c8810b647d78ac2c3bc852a858df7b3d7e2eaf33078cab74879afa830"}},{"citation":"842-50-55-2","para":"55-2","html":"<div class=\"asc-body\"><div class=\"norm-text\"> <span class=\"sfragment\" id=\"sfr_E74F4C9A-6E92-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">A <a href=\"/glossary/d/#delayed-equity-investment\" class=\"term\" title=\"In leveraged lease transactions that have been structured with terms such that the lessee's rent payments begin one to two years after lease inception, equity contributions the lessor agrees to make (in the lease agreement or a separate binding contract) that are used to service the nonrecourse debt during this brief period. The total amount of the lessor's contributions is specifically limited by the agreements.\"><span>delayed equity investment</span></a> frequently obligates the <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> to make up the shortfall between rent and debt service in the first several years of the transaction. The type of recourse debt resulting from the delayed equity investment does not contradict the notion of nonrecourse and, therefore, does not preclude <a href=\"/glossary/l/#leveraged-lease\" class=\"term\" title=\"From the perspective of a lessor, a lease that was classified as a leveraged lease in accordance with the leases guidance in effect before the effective date and for which the commencement date is before the effective date.\"><span>leveraged lease</span></a> accounting as long as other requirements of leveraged lease accounting are met. The lessor's related obligation should be recorded as a liability at present value at <a href=\"/glossary/l/#lease-inception\" class=\"term\" title=\"The date of the lease agreement or commitment, if earlier. For purposes of this definition, a commitment shall be in writing, signed by the parties in interest to the transaction, and shall specifically set forth the principal provisions of the transaction. If any of the principal provisions are yet to be negotiated, such a preliminary agreement or commitment does not qualify for purposes of this definition.\"><span>lease inception</span></a>.</span></span> </div> </div>","snippet":"A delayed equity investment frequently obligates the lessor to make up the shortfall between rent and debt service in the first several years of the transaction. The type of recourse debt resulting from the delayed equit…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:9134e1700979b4677552055dff475f0167ee835794d293d54b98068f2761ccef","downloaded_from":"2026-09-10T01:58:27.334Z","last_downloaded_at":"2026-09-10T01:58:27.334Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479679","source_sha256":"6f80143c8810b647d78ac2c3bc852a858df7b3d7e2eaf33078cab74879afa830"}},{"citation":"842-50-55-3","para":"55-3","html":"<div class=\"asc-body\"><div class=\"norm-text\"> <span class=\"sfragment\" id=\"sfr_E74F4E47-6E92-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">Recognition of the liability would increase the lessor's net investment on which the lessor bases its pattern of income recognition. While the increase to the net investment results in an increase in income, it may be offset by the accrual of interest on the liability.</span></span> </div> </div>","snippet":"Recognition of the liability would increase the lessor's net investment on which the lessor bases its pattern of income recognition. While the increase to the net investment results in an increase in income, it may be of…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:59913937a77babef7c6e87d5984a148ac51d6b42c088476a9c1a60ece84cc103","downloaded_from":"2026-09-10T01:58:27.334Z","last_downloaded_at":"2026-09-10T01:58:27.334Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479679","source_sha256":"6f80143c8810b647d78ac2c3bc852a858df7b3d7e2eaf33078cab74879afa830"}},{"citation":"842-50-55-4","para":"55-4","html":"<div class=\"asc-body\"><div class=\"norm-text\"> <span class=\"sfragment\" id=\"sfr_E74F4FE2-6E92-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">The accounting for income taxes related to <a href=\"/glossary/l/#leveraged-lease\" class=\"term\" title=\"From the perspective of a lessor, a lease that was classified as a leveraged lease in accordance with the leases guidance in effect before the effective date and for which the commencement date is before the effective date.\"><span>leveraged leases</span></a> set forth in this Subtopic is not consistent with the guidance in Topic <a altsource=\"GUID-536ACE12-AE3B-4036-B02C-E0B2A90A3E70.ditamap\" class=\"ditamap\">740</a> on income taxes.</span></span> </div> </div>","snippet":"The accounting for income taxes related to leveraged leases set forth in this Subtopic is not consistent with the guidance in Topic 740 on income taxes.","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:d02c0b11d2bddbed71503f65089fc2fd23187ee0a19ed5c8a13cec181cfc2726","downloaded_from":"2026-09-10T01:58:27.334Z","last_downloaded_at":"2026-09-10T01:58:27.334Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479679","source_sha256":"6f80143c8810b647d78ac2c3bc852a858df7b3d7e2eaf33078cab74879afa830"}},{"citation":"842-50-55-5","para":"55-5","html":"<div class=\"asc-body\"><div class=\"norm-text\"> <span class=\"sfragment\" id=\"sfr_E74F516F-6E92-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">The integration of the results of accounting for income taxes related to leveraged leases with the other results of accounting for income taxes as required by Topic <a altsource=\"GUID-536ACE12-AE3B-4036-B02C-E0B2A90A3E70.ditamap\" class=\"ditamap\">740</a> is an issue if all of the following exist:</span></span> <ol class=\"ol-norm\"> <li class=\"li-norm\"><span class=\"linum\">a</span> <div class=\"p\"> <span class=\"sfragment\" id=\"sfr_E74F5304-6E92-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">The accounting for a leveraged lease requires recognition of deferred tax credits.</span></span> </div> </li> <li class=\"li-norm\"><span class=\"linum\">b</span> <div class=\"p\"> <span class=\"sfragment\" id=\"sfr_E74F5483-6E92-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">The guidance in Topic <a altsource=\"GUID-536ACE12-AE3B-4036-B02C-E0B2A90A3E70.ditamap\" class=\"ditamap\">740</a> limits the recognition of a tax benefit for deductible temporary differences and carryforwards not related to the leveraged lease.</span></span> </div> </li> <li class=\"li-norm\"><span class=\"linum\">c</span> <div class=\"p\"> <span class=\"sfragment\" id=\"sfr_E74F5664-6E92-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">Unrecognized tax benefits in this paragraph could offset taxable amounts that result from future recovery of the net investment in the leveraged lease.</span></span> </div> </li> </ol> </div> </div>","snippet":"The integration of the results of accounting for income taxes related to leveraged leases with the other results of accounting for income taxes as required by Topic 740 is an issue if all of the following exist:\n(a) The …","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:c44d879f2a4cba009ef13a3b79fe28fee7c841f07d36dc234f0de2d44ea08a62","downloaded_from":"2026-09-10T01:58:27.334Z","last_downloaded_at":"2026-09-10T01:58:27.334Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479679","source_sha256":"6f80143c8810b647d78ac2c3bc852a858df7b3d7e2eaf33078cab74879afa830"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:95838276d1e94bbfbfac5b2eed0b007837ec1bfc501e13271b32046bb1366bba","downloaded_from":"2026-09-10T01:58:27.334Z","last_downloaded_at":"2026-09-10T01:58:27.334Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479679","source_sha256":"6f80143c8810b647d78ac2c3bc852a858df7b3d7e2eaf33078cab74879afa830"}},{"block":null,"heading":"Illustrations","paragraphs":[{"citation":"842-50-55-6","para":"55-6","html":"<div class=\"asc-body\"><div class=\"norm-text\"> <span class=\"sfragment\" id=\"sfr_E74F581C-6E92-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">This Example illustrates a lessor's accounting for a leveraged lease in accordance with the guidance in this Subtopic. It also illustrates one way of meeting the disclosure requirements in paragraphs <a href=\"/asc/842/50/#842-50-45-1\" class=\"xref\">842-50-45-1</a> and <a href=\"/asc/842/50/#842-50-50-1\" class=\"xref\">842-50-50-1</a> as applied to a leveraged lease. The Example does not encompass all circumstances that may arise about leveraged leases; rather, the Example is based on a single instance of a leveraged lease. The elements of accounting and reporting illustrated for this Example of a leveraged lease are as follows:</span></span> <ol class=\"ol-norm\"> <li class=\"li-norm\"><span class=\"linum\">a</span> <div class=\"p\"> <span class=\"sfragment\" id=\"sfr_E74F59FE-6E92-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">Cash flow analysis by years (see paragraph <a href=\"/asc/842/50/#842-50-55-8\" class=\"xref\">842-50-55-8</a>)</span></span> </div> </li> <li class=\"li-norm\"><span class=\"linum\">b</span> <div class=\"p\"> <span class=\"sfragment\" id=\"sfr_E74F5B5D-6E92-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">Allocation of annual cash flow to investment and income (see paragraph <a href=\"/asc/842/50/#842-50-55-9\" class=\"xref\">842-50-55-9</a>)</span></span> </div> </li> <li class=\"li-norm\"><span class=\"linum\">c</span> <div class=\"p\"> <span class=\"sfragment\" id=\"sfr_E74F5CE0-6E92-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">Journal entries for lessor's initial investment and first year of operation (see paragraph <a href=\"/asc/842/50/#842-50-55-10\" class=\"xref\">842-50-55-10</a>)</span></span> </div> </li> <li class=\"li-norm\"><span class=\"linum\">d</span> <div class=\"p\"> <span class=\"sfragment\" id=\"sfr_E74F5EB7-6E92-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">Financial statements including notes at end of second year (see paragraph <a href=\"/asc/842/50/#842-50-55-11\" class=\"xref\">842-50-55-11</a>)</span></span> </div> </li> <li class=\"li-norm\"><span class=\"linum\">e</span> <div class=\"p\"> <span class=\"sfragment\" id=\"sfr_E74F60FF-6E92-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">Accounting for a revision in the estimated residual value of the leased asset assumed to occur in the eleventh year of the lease (from $200,000 to $120,000):</span></span> </div> <ol class=\"ol-norm\"> <li class=\"li-norm\"><span class=\"linum\">1</span> <div class=\"p\"> <span class=\"sfragment\" id=\"sfr_E74F6293-6E92-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">Revised allocation of annual cash flow to investment and income (see paragraph <a href=\"/asc/842/50/#842-50-55-12\" class=\"xref\">842-50-55-12</a>)</span></span> </div> </li> <li class=\"li-norm\"><span class=\"linum\">2</span> <div class=\"p\"> <span class=\"sfragment\" id=\"sfr_E74F6424-6E92-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">Balances in investment accounts at beginning of the eleventh year before revised estimate (see paragraph <a href=\"/asc/842/50/#842-50-55-13\" class=\"xref\">842-50-55-13</a>)</span></span> </div> </li> <li class=\"li-norm\"><span class=\"linum\">3</span> <div class=\"p\"> <span class=\"sfragment\" id=\"sfr_E74F65AA-6E92-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">Journal entries (see paragraph <a href=\"/asc/842/50/#842-50-55-14\" class=\"xref\">842-50-55-14</a>)</span></span> </div> </li> <li class=\"li-norm\"><span class=\"linum\">4</span> <div class=\"p\"> <span class=\"sfragment\" id=\"sfr_E74F66F8-6E92-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">Adjustment of investment accounts (see paragraph <a href=\"/asc/842/50/#842-50-55-15\" class=\"xref\">842-50-55-15</a>).</span></span> </div> </li> </ol> </li> </ol> </div> </div>","snippet":"This Example illustrates a lessor's accounting for a leveraged lease in accordance with the guidance in this Subtopic. It also illustrates one way of meeting the disclosure requirements in paragraphs 842-50-45-1 and 842-…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:aa7db35662eabffe73f48bce9adff36b4f4ca359d5f3a559c17175d57dcda525","downloaded_from":"2026-09-10T01:58:27.334Z","last_downloaded_at":"2026-09-10T01:58:27.334Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479679","source_sha256":"6f80143c8810b647d78ac2c3bc852a858df7b3d7e2eaf33078cab74879afa830"}},{"citation":"842-50-55-7","para":"55-7","html":"<div class=\"asc-body\"><div class=\"norm-text\"> <span class=\"sfragment\" id=\"sfr_E74F684A-6E92-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">This Example has the following terms and assumptions.</span></span> <ul class=\"ul simple\" id=\"SL77920288-209974__GUID-F187FDD1-C4E1-4689-9156-9D3C27856A8E\"> <li class=\"li\" id=\"SL77920288-209974__SL77933864-209974\"> <div class=\"p\"> <div class=\"fig figure fignone\"> <img src=\"/asc-img/GUID-FFE32B68-D4FA-47F8-8DCA-50156C719AA2-low.gif\" altsource=\"GUID-FFE32B68-D4FA-47F8-8DCA-50156C719AA2-low.gif\" alt=\" \" loading=\"lazy\"> <span class=\"sfragment\" id=\"sfr_E74F6FA2-6E92-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\"></span></span> <div class=\"figcaption\">Cost of leased asset (equipment) \"$1,000,000 \" Lease term \"15 years, dating from January 1, 1975\" Lease rental payments \"$90,000 per year (payable last day of each year)\" Residual value \"$200,000 estimated to be realized 1 year after lease termination; in the eleventh year of the lease the estimate is reduced to $120,000\" Financing: Equity investment by lessor \"$400,000 \" Long-term nonrecourse debt \"$600,000, bearing interest at 9% and repayable in annual installments (on last day of each year) of $74,435.30\" Depreciation allowable to lessor for income tax purposes \"7-year asset depreciation range life using double-declining-balance method for the first 2 years (with the half-year convention election applied in the first year) and sum-of-years digits method for remaining life, depreciated to $100,000 salvage value\" \"Lessor's income tax rate (federal and state)\" 50.4% (assumed to continue in existence throughout the term of the lease) Investment tax credit \"10% of equipment cost or $100,000 (realized by the lessor on last day of first year of lease)\" Initial direct costs \"For simplicity, initial direct costs have not been included in the illustration\"</div></div> </div> </li> </ul> </div> </div>","snippet":"This Example has the following terms and assumptions.","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:4f5304978767bb65ed46562d63166cf64c3d75956f8ff88175db43543a3900c6","downloaded_from":"2026-09-10T01:58:27.334Z","last_downloaded_at":"2026-09-10T01:58:27.334Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479679","source_sha256":"6f80143c8810b647d78ac2c3bc852a858df7b3d7e2eaf33078cab74879afa830"}},{"citation":"842-50-55-8","para":"55-8","html":"<div class=\"asc-body\"><div class=\"norm-text\"> <span class=\"sfragment\" id=\"sfr_E74F712D-6E92-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">Cash flow analysis by years follows.</span></span> <ul class=\"ul simple\" id=\"SL77920288-209974__GUID-C2040B29-A52D-4D1F-9F01-E3327D81864A\"> <li class=\"li\" id=\"SL77920288-209974__SL77933866-209974\"> <div class=\"p\"> <div class=\"fig figure fignone\"> <img src=\"/asc-img/GUID-9EF71D09-A94A-42EB-8B66-2F87E40DB33F-low.gif\" altsource=\"GUID-9EF71D09-A94A-42EB-8B66-2F87E40DB33F-low.gif\" alt=\" \" loading=\"lazy\"> <span class=\"sfragment\" id=\"sfr_E74F778A-6E92-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\"></span></span> <div class=\"figcaption\"> 1 2 3 4 5 6 7 8 9 Year Gross Lease Rentals and Residual Value Depreciation (for Income Tax Purposes) Loan Interest Payments Taxable Income (Loss) (Col. 1- 2- 3) Income Tax Credits (Charges) (Col. 4 × 50.4%) Loan Principal Payments Investment Tax Credit Realized Annual Cash Flow (Col. 1- 3 + 5 - 6 + 7) Cumulative Cash Flow Initial Investment - - - - - - - \" $(400,000)\" \" $(400,000)\" 1 \" $90,000 \" \" $142,857 \" \" $54,000 \" \" $(106,857)\" \" $53,856 \" \" $20,435 \" \" $100,000 \" \" 169,421 \" \" (230,579)\" 2 \" 90,000 \" \" 244,898 \" \" 52,161 \" \" (207,059)\" \" 104,358 \" \" 22,274 \" - \" 119,923 \" \" (110,656)\" 3 \" 90,000 \" \" 187,075 \" \" 50,156 \" \" (147,231)\" \" 74,204 \" \" 24,279 \" - \" 89,769 \" \" (20,887)\" 4 \" 90,000 \" \" 153,061 \" \" 47,971 \" \" (111,032)\" \" 55,960 \" \" 26,464 \" - \" 71,525 \" \" 50,638 \" 5 \" 90,000 \" \" 119,048 \" \" 45,589 \" \" (74,637)\" \" 37,617 \" \" 28,846 \" - \" 53,182 \" \" 103,820 \" 6 \" 90,000 \" \" 53,061 \" \" 42,993 \" \" (6,054)\" \" 3,051 \" \" 31,442 \" - \" 18,616 \" \" 122,436 \" 7 \" 90,000 \" - \" 40,163 \" \" 49,837 \" \" (25,118)\" \" 34,272 \" - \" (9,553)\" \" 112,883 \" 8 \" 90,000 \" - \" 37,079 \" \" 52,921 \" \" (26,672)\" \" 37,357 \" - \" (11,108)\" \" 101,775 \" 9 \" 90,000 \" - \" 33,717 \" \" 56,283 \" \" (28,367)\" \" 40,719 \" - \" (12,803)\" \" 88,972 \" 10 \" 90,000 \" - \" 30,052 \" \" 59,948 \" \" (30,214)\" \" 44,383 \" - \" (14,649)\" \" 74,323 \" 11 \" 90,000 \" - \" 26,058 \" \" 63,942 \" \" (32,227)\" \" 48,378 \" - \" (16,663)\" \" 57,660 \" 12 \" 90,000 \" - \" 21,704 \" \" 68,296 \" \" (34,421)\" \" 52,732 \" - \" (18,857)\" \" 38,803 \" 13 \" 90,000 \" - \" 16,957 \" \" 73,043 \" \" (36,813)\" \" 57,478 \" - \" (21,248)\" \" 17,555 \" 14 \" 90,000 \" - \" 11,785 \" \" 78,215 \" \" (39,420)\" \" 62,651 \" - \" (23,856)\" \" (6,301)\" 15 \" 90,000 \" - \" 6,145 \" \" 83,855 \" \" (42,263)\" \" 68,290 \" - \" (26,698)\" \" (32,999)\" 16 \" 200,000 \" \" 100,000 \" - \" 100,000 \" \" (50,400)\" - - \" 149,600 \" \" 116,601 \" Totals \" $1,550,000 \" \" $1,000,000 \" \" $516,530 \" \" $33,470 \" \" $(16,869)\" \" $600,000 \" \" $100,000 \" \" $116,601 \" </div></div> </div> </li> </ul> </div> </div>","snippet":"Cash flow analysis by years follows.","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:fe82d2b46caecc9e0f902afb728c86d2c1c2a58fdb8f6b1e32c03d40e2a3bc5a","downloaded_from":"2026-09-10T01:58:27.334Z","last_downloaded_at":"2026-09-10T01:58:27.334Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479679","source_sha256":"6f80143c8810b647d78ac2c3bc852a858df7b3d7e2eaf33078cab74879afa830"}},{"citation":"842-50-55-9","para":"55-9","html":"<div class=\"asc-body\"><div class=\"norm-text\"> <span class=\"sfragment\" id=\"sfr_E74F78F3-6E92-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">Allocation of annual cash flow to investment and income follows.</span></span> <ul class=\"ul simple\" id=\"SL77920288-209974__GUID-D8D2823E-A843-4227-B9A8-E3F987B94CEE\"> <li class=\"li\" id=\"SL77920288-209974__SL77933868-209974\"> <div class=\"p\"> <div class=\"fig figure fignone\"> <img src=\"/asc-img/GUID-CED16695-B3B5-4C52-92CA-1455FC8B924E-low.gif\" altsource=\"GUID-CED16695-B3B5-4C52-92CA-1455FC8B924E-low.gif\" alt=\" \" loading=\"lazy\"> <span class=\"sfragment\" id=\"sfr_E74F8017-6E92-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\"></span></span> <div class=\"figcaption\"> 1 2 3 4 5 6 7 Annual Cash Flow Components of Income (a) Year Lessor's Net Investment at Beginning of Year \"Total (from Col. 8 of Paragraph 842-50-55-8)\" Allocated to Investment Allocated to Income (b) Pretax Income Tax Effect of Pretax Income Investment Tax Credit 1 \" $400,000 \" \" $169,421 \" \" $134,833 \" \" $34,588 \" \" $9,929 \" \" $(5,004)\" \" $29,663 \" 2 \" 265,167 \" \" 119,923 \" \" 96,994 \" \" 22,929 \" \" 6,582 \" \" (3,317)\" \" 19,664 \" 3 \" 168,173 \" \" 89,769 \" \" 75,227 \" \" 14,542 \" \" 4,174 \" \" (2,104)\" \" 12,472 \" 4 \" 92,946 \" \" 71,525 \" \" 63,488 \" \" 8,037 \" \" 2,307 \" \" (1,163)\" \" 6,893 \" 5 \" 29,458 \" \" 53,182 \" \" 50,635 \" \" 2,547 \" 731 (368) \" 2,184 \" 6 \" (21,177)\" \" 18,616 \" \" 18,616 \" - - - - 7 \" (39,793)\" \" (9,553)\" \" (9,553)\" - - - - 8 \" (30,240)\" \" (11,108)\" \" (11,108)\" - - - - 9 \" (19,132)\" \" (12,803)\" \" (12,803)\" - - - - 10 \" (6,329)\" \" (14,649)\" \" (14,649)\" - - - - 11 \" 8,320 \" \" (16,663)\" \" (17,382)\" 719 206 (104) 617 12 \" 25,702 \" \" (18,857)\" \" (21,079)\" \" 2,222 \" 637 (321) \" 1,906 \" 13 \" 46,781 \" \" (21,248)\" \" (25,293)\" \" 4,045 \" \" 1,161 \" (585) \" 3,469 \" 14 \" 72,074 \" \" (23,856)\" \" (30,088)\" \" 6,232 \" \" 1,789 \" (902) \" 5,345 \" 15 \" 102,162 \" \" (26,698)\" \" (35,532)\" \" 8,834 \" \" 2,536 \" \" (1,278)\" \" 7,576 \" 16 \" 137,694 \" \" 149,600 \" \" 137,694 \" \" 11,906 \" \" 3,418 \" \" (1,723)\" \" 10,211 \" Totals \" $516,601 \" \" $400,000 \" \" $116,601 \" \" $33,470 \" \" $(16,869)\" \" $100,000 \" (a)\t\"Lease income is recognized as 8.647% of the unrecovered investment at the beginning of each year in which the net investment is positive. The rate is that rate which, if applied to the net investment in the years in which the net investment is positive, will distribute the net income (net cash flow) to those years.\" (b)\tEach component is allocated among the years of positive net investment in proportion to the allocation of net income in column 4. </div></div> </div> </li> </ul> </div> </div>","snippet":"Allocation of annual cash flow to investment and income follows.","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:497fce6f68e91853b2991863a3eb05255d64e437ac61c71a3d7df6003033b14d","downloaded_from":"2026-09-10T01:58:27.334Z","last_downloaded_at":"2026-09-10T01:58:27.334Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479679","source_sha256":"6f80143c8810b647d78ac2c3bc852a858df7b3d7e2eaf33078cab74879afa830"}},{"citation":"842-50-55-10","para":"55-10","html":"<div class=\"asc-body\"><div class=\"norm-text\"> <span class=\"sfragment\" id=\"sfr_E74F81A7-6E92-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">Illustrative journal entries for the year ending December 31, 1975, follow.</span></span> <ul class=\"ul simple\" id=\"SL77920288-209974__GUID-94F49288-8043-40BB-9F05-E92F2401CD10\"> <li class=\"li\" id=\"SL77920288-209974__SL77933870-209974\"> <div class=\"p\"> <div class=\"fig figure fignone\"> <img src=\"/asc-img/GUID-CC230BAB-6366-457C-B1CB-BF266472CE3C-low.gif\" altsource=\"GUID-CC230BAB-6366-457C-B1CB-BF266472CE3C-low.gif\" alt=\" \" loading=\"lazy\"> <span class=\"sfragment\" id=\"sfr_E74F8890-6E92-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\"></span></span> <div class=\"figcaption\">Lessor's Initial Investment Debit Credit \"Rentals receivable (table in paragraph 842-50-55-8, total of column 1 minus residual value, minus totals of columns 3 and 6)\" \" $233,470 \" \"Investment tax credit receivable (table in paragraph 842-50-55-8, column 7)\" \" 100,000 \" Estimated residual value (paragraph 842-50-55-7) \" 200,000 \" \"Unearned and deferred income (table in paragraph 842-50-55-9, totals of columns 5 and 7)\" \" $133,470 \" Cash \" 400,000 \" Record lessor's initial investment First Year of Operation Journal Entry 1 Cash \" 15,565 \" \"Rentals receivable (table in paragraph 842-50-55-8, column 1 minus columns 3 and 6)\" \" 15,565 \" Collection of first year's net rental Journal Entry 2 Cash (a) \" 100,000 \" \"Investment tax credit receivable (table in paragraph 842-50-55-8, column 7)\" \" 100,000 \" Receipt of investment tax credit Journal Entry 3 Unearned and deferred income \" 9,929 \" \"Income from leveraged leases (table in paragraph 842-50-55-9, column 5)\" \" 9,929 \" Recognition of first year's portion of pretax income allocated in the same proportion as the allocation of total income \"(34,588 ÷ 116,601) × 33,470 = 9,929 \" Journal Entry 4 Unearned and deferred income \" 29,663 \" \"Investment tax credit recognized (table in paragraph 842-50-55-9, column 7)\" \" 29,663 \" Recognition of first year's portion of investment tax credit allocated in the same proportion as the allocation of total income \"(34,588 ÷ 116,601) × 100,000 = 29,663\" Journal Entry 5 \"Cash (table in paragraph 842-50-55-8, column 5) (a)\" \" 53,856 \" \"Income tax expense (table in paragraph 842-50-55-9, column 6)\" \" 5,004 \" Deferred taxes \" 58,860 \" \"To record receipt of first year's tax credit from lease operation, to charge income tax expense for tax effect of pretax accounting income, and to recognize as deferred taxes the tax effect of the difference between pretax accounting income and the tax loss for the year, calculated as follows:\" \"Tax loss (table in paragraph 842-50-55-8, column 4)\" \" $(106,857)\" Pretax accounting income \" 9,929 \" Difference \" $(116,786)\" \"Deferred taxes ($116,786 × 50.4%)\" \" $58,860 \" (a)\t\"Receipts of the investment tax credit and other tax benefits are shown as cash receipts for simplicity only. Those receipts probably would not be in the form of immediate cash inflow. Instead, they likely would be in the form of reduced payments of taxes on other income of the lessor or on the combined income of the lessor and other entities whose operations are joined with the lessor's operations in a consolidated tax return.\" </div></div> </div> </li> </ul> </div> </div>","snippet":"Illustrative journal entries for the year ending December 31, 1975, follow.","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:90c5175dbcb951d7f639d6ecc7e934775f6afd18b02e9e179d20d2a0cdb6dbc0","downloaded_from":"2026-09-10T01:58:27.334Z","last_downloaded_at":"2026-09-10T01:58:27.334Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479679","source_sha256":"6f80143c8810b647d78ac2c3bc852a858df7b3d7e2eaf33078cab74879afa830"}},{"citation":"842-50-55-11","para":"55-11","html":"<div class=\"asc-body\"><div class=\"norm-text\"> <span class=\"sfragment\" id=\"sfr_E74F89A8-6E92-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">The following are illustrative partial financial statements including notes.</span></span> <ul class=\"ul simple\" id=\"SL77920288-209974__GUID-E4472B93-5780-4B28-9913-70E02FA83108\"> <li class=\"li\" id=\"SL77920288-209974__SL77933872-209974\"> <div class=\"p\"> <div class=\"fig figure fignone\"> <img src=\"/asc-img/GUID-232D2D17-56C5-44BD-AAB3-FAE72480042A-low.gif\" altsource=\"GUID-232D2D17-56C5-44BD-AAB3-FAE72480042A-low.gif\" alt=\" \" loading=\"lazy\"> <span class=\"sfragment\" id=\"sfr_E74F8E12-6E92-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\"></span></span> <div class=\"figcaption\">BALANCE SHEET\tASSETS LIABILITIES \"December 31,\" \"December 31,\" 1976 1975 1976 1975 Investment in leveraged leases \" $334,708 \" \" $324,027 \" Deferred taxes arising from leveraged leases \" $166,535 \" \" $58,860 \" </div></div> </div> </li> </ul> <ul class=\"ul simple\" id=\"SL77920288-209974__GUID-64588DF7-AB36-40FB-90CE-1DEAFA925BD5\"> <li class=\"li\" id=\"SL77920288-209974__SL77933873-209974\"> <div class=\"p\"> <div class=\"fig figure fignone\"> <img src=\"/asc-img/GUID-46CBAE56-7799-402D-95A6-16CCD21B5BFA-low.gif\" altsource=\"GUID-46CBAE56-7799-402D-95A6-16CCD21B5BFA-low.gif\" alt=\" \" loading=\"lazy\"> <span class=\"sfragment\" id=\"sfr_E74F925E-6E92-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\"></span></span> <div class=\"figcaption\">INCOME STATEMENT (Ignoring all income and expense items other than those relating to leveraged leasing) 1976 1975 Income from leveraged leases \" $6,582 \" \" $9,929 \" Income before taxes and investment tax credit \" 6,582 \" \" 9,929 \" Less: Income tax expense (a) \" (3,317)\" \" (5,004)\" \" 3,265 \" \" 4,925 \" Investment tax credit recognized (a) \" 19,664 \" \" 29,663 \" Net income \" $22,929 \" \" $34,588 \" (a)\t\"These two items may be netted for purposes of presentation in the income statement, provided that the separate amounts are disclosed in a note to financial statements.\"\t</div></div> </div> </li> </ul> <span class=\"sfragment\" id=\"sfr_E74F934C-6E92-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">The following are notes to the illustrative financial statements included in this Example.</span></span> <ul class=\"ul simple\" id=\"SL77920288-209974__GUID-DCCE3404-047A-490B-8FCA-D097A1867F5C\"> <li class=\"li\" id=\"SL77920288-209974__SL77933874-209974\"> <span class=\"sfragment\" id=\"sfr_E74F9436-6E92-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">Investment in Leveraged Leases</span></span> </li> <li class=\"li\" id=\"SL77920288-209974__SL77933875-209974\"> <span class=\"sfragment\" id=\"sfr_E74F951D-6E92-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">Entity is the lessor in a leveraged lease agreement entered into in 1975 under which mining equipment having an estimated economic life of 18 years was leased for a term of 15 years. Entity's equity investment represented 40 percent of the purchase price; the remaining 60 percent was furnished by third-party financing in the form of long-term debt that provides for no recourse against Entity and is secured by a first lien on the property. At the end of the lease term, the equipment is turned back to Entity. The residual value at that time is estimated to be 20 percent of cost. For federal income tax purposes, Entity receives the investment tax credit and has the benefit of tax deductions for depreciation on the entire leased asset and for interest on the long-term debt. During the early years of the lease, those deductions exceed the lease rental income, and substantial excess deductions are available to be applied against Entity's other income. In the later years of the lease, rental income will exceed the deductions and taxes will be payable. Deferred taxes are provided to reflect this reversal. Entity's net investment in leveraged leases is composed of the following elements.</span></span> </li> </ul> <ul class=\"ul simple\" id=\"SL77920288-209974__GUID-C3939BCC-40E2-461B-8F6B-2D9067FDE74C\"> <li class=\"li\" id=\"SL77920288-209974__SL77933876-209974\"> <div class=\"p\"> <div class=\"fig figure fignone\"> <img src=\"/asc-img/GUID-41FA9B43-E031-4667-89B3-92679734C109-low.gif\" altsource=\"GUID-41FA9B43-E031-4667-89B3-92679734C109-low.gif\" alt=\" \" loading=\"lazy\"> <span class=\"sfragment\" id=\"sfr_E74F9905-6E92-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\"></span></span> <div class=\"figcaption\">\"December 31,\" 1976 1975 Rentals receivable (net of principal and interest on the nonrecourse debt) \" $202,340 \" \" $217,905 \" Estimated residual value of leased assets \" 200,000 \" \" 200,000 \" Less: Unearned and deferred income \" (67,632)\" \" (93,878)\" Investment in leveraged leases \" 334,708 \" \" 324,027 \" Less: Deferred taxes arising from leveraged leases \" (166,535)\" \" (58,860)\" Net investment in leveraged leases \" $168,173 \" \" $265,167 \"</div></div> </div> </li> </ul> </div> </div>","snippet":"The following are illustrative partial financial statements including notes.\nThe following are notes to the illustrative financial statements included in this Example.\nInvestment in Leveraged Leases\nEntity is the lessor …","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:6c1a5ce864d498c10864e57fff12313b19392825adc204150cdf641c54d0707a","downloaded_from":"2026-09-10T01:58:27.334Z","last_downloaded_at":"2026-09-10T01:58:27.334Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479679","source_sha256":"6f80143c8810b647d78ac2c3bc852a858df7b3d7e2eaf33078cab74879afa830"}},{"citation":"842-50-55-12","para":"55-12","html":"<div class=\"asc-body\"><div class=\"norm-text\"> <span class=\"sfragment\" id=\"sfr_E74F99F2-6E92-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">Allocation of annual cash flow to investment and income follows, revised to include new residual value estimate.</span></span> <ul class=\"ul simple\" id=\"SL77920288-209974__GUID-A58C6CF5-4B91-41C5-B7CD-0C6932CA6755\"> <li class=\"li\" id=\"SL77920288-209974__SL77934191-209974\"> <div class=\"p\"> <div class=\"fig figure fignone\"> <img src=\"/asc-img/GUID-DD5345B2-7464-4853-B846-607992FF5E07-low.gif\" altsource=\"GUID-DD5345B2-7464-4853-B846-607992FF5E07-low.gif\" alt=\" \" loading=\"lazy\"> <span class=\"sfragment\" id=\"sfr_E74F9DC6-6E92-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\"></span></span> <div class=\"figcaption\"> Annual Cash Flow Components of Income Year Lessor's Net Investment at Beginning of Year Total Allocated to Investment Allocated to Income (a) Pretax Loss Tax Effect of Pretax Loss Investment Tax Credit 1 \" $400,000 \" \" $169,421 \" \" $142,458 \" \" $26,963 \" \" $(16,309)\" \" $8,220 \" \" $35,052 \" 2 \" 257,542 \" \" 119,923 \" \" 102,563 \" \" 17,360 \" \" (10,501)\" \" 5,293 \" \" 22,568 \" 3 \" 154,979 \" \" 89,769 \" \" 79,323 \" \" 10,446 \" \" (6,319)\" \" 3,184 \" \" 13,581 \" 4 \" 75,656 \" \" 71,525 \" \" 66,425 \" \" 5,100 \" \" (3,085)\" \" 1,555 \" \" 6,630 \" 5 \" 9,231 \" \" 53,182 \" \" 52,560 \" 622 (377) 190 809 6 \" (43,329)\" \" 18,616 \" \" 18,616 \" - - - - 7 \" (61,945)\" \" (9,553)\" \" (9,553)\" - - - - 8 \" (52,392)\" \" (11,108)\" \" (11,108)\" - - - - 9 \" (41,284)\" \" (12,803)\" \" (12,803)\" - - - - 10 \" (28,481)\" \" (14,649)\" \" (14,649)\" - - - - 11 \" (13,832)\" \" (16,663)\" \" (16,663)\" - - - - 12 \" 2,831 \" \" (18,857)\" \" (19,048)\" 191 (115) 58 248 13 \" 21,879 \" \" (21,248)\" \" (22,723)\" \" 1,475 \" (892) 450 \" 1,917 \" 14 \" 44,602 \" \" (23,856)\" \" (26,862)\" \" 3,006 \" \" (1,819)\" 916 \" 3,909 \" 15 \" 71,464 \" \" (26,698)\" \" (31,515)\" \" 4,817 \" \" (2,914)\" \" 1,469 \" \" 6,262 \" 16 \" 102,979 \" \" 109,920 \" \" 102,979 \" \" 6,941 \" \" (4,199)\" \" 2,116 \" \" 9,024 \" Totals \" $476,921 \" \" $400,000 \" \" $76,921 \" \" $(46,530)\" \" $23,451 \" \" $100,000 \" (a)\tThe revised allocation rate is 6.741%.\t</div></div> </div> </li> </ul> </div> </div>","snippet":"Allocation of annual cash flow to investment and income follows, revised to include new residual value estimate.","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:a7170117eee1e579c3ac68909bc2286067ea6e7283a5d9710e93bfba049334db","downloaded_from":"2026-09-10T01:58:27.334Z","last_downloaded_at":"2026-09-10T01:58:27.334Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479679","source_sha256":"6f80143c8810b647d78ac2c3bc852a858df7b3d7e2eaf33078cab74879afa830"}},{"citation":"842-50-55-13","para":"55-13","html":"<div class=\"asc-body\"><div class=\"norm-text\"> <span class=\"sfragment\" id=\"sfr_E74F9ED4-6E92-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">Balances in investment accounts before revised estimate of residual value follow.</span></span> <ul class=\"ul simple\" id=\"SL77920288-209974__GUID-566627CE-3F7E-4EF3-9061-E9D4DE96225F\"> <li class=\"li\" id=\"SL77920288-209974__SL77934192-209974\"> <div class=\"p\"> <div class=\"fig figure fignone\"> <img src=\"/asc-img/GUID-8984F43E-1B40-4351-8C53-B80FD11A6AE9-low.gif\" altsource=\"GUID-8984F43E-1B40-4351-8C53-B80FD11A6AE9-low.gif\" alt=\" \" loading=\"lazy\"> <span class=\"sfragment\" id=\"sfr_E74FA2A9-6E92-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\"></span></span> <div class=\"figcaption\"> 1 2 3 4 5 6 7 \"Unearned and Deferred Income\" Rentals Receivable (a) Estimated Residual Value Investment Tax Credit Receivable Pretax Income (Loss) (b) Investment Tax Credit (c) Deferred Taxes (d) Net Investment (Col. 1+2+3) less (Col. 4 + 5 + 6) Initial investment \" $233,470 \" \" $200,000 \" \" $100,000 \" \" $33,470 \" \" $100,000 \" $- \" $400,000 \" Changes in year of operation 1 \" (15,565)\" - \" (100,000)\" \" (9,929)\" \" (29,663)\" \" 58,860 \" \" (134,833)\" 2 \" (15,565)\" - - \" (6,582)\" \" (19,664)\" \" 107,675 \" \" (96,994)\" 3 \" (15,565)\" - - \" (4,174)\" \" (12,472)\" \" 76,308 \" \" (75,227)\" 4 \" (15,565)\" - - \" (2,307)\" \" (6,893)\" \" 57,123 \" \" (63,488)\" 5 \" (15,565)\" - - (731) \" (2,184)\" \" 37,985 \" \" (50,635)\" 6 \" (15,565)\" - - - - \" 3,051 \" \" (18,616)\" 7 \" (15,565)\" - - - - \" (25,118)\" \" 9,553 \" 8 \" (15,564)\" - - - - \" (26,672)\" \" 11,108 \" 9 \" (15,564)\" - - - - \" (28,367)\" \" 12,803 \" 10 \" (15,565)\" - - - - \" (30,214)\" \" 14,649 \" \"Balances, beginning of eleventh year\" \" $77,822 \" \" $200,000 \" $- \" $9,747 \" \" $29,124 \" \" $230,631 \" \" $8,320 \" (a)\t\"Table in paragraph 842-50-55-8, column 1, excluding residual value, minus columns 3 and 6.\" (b)\t\"Table in paragraph 842-50-55-9, column 5.\" (c)\t\"Table in paragraph 842-50-55-9, column 7.\" (d)\t50.4% of difference between taxable income (loss) in column 4 of the table in paragraph 842-50-55-8 and pretax accounting income (loss) in column 5 of the table in paragraph 842-50-55-9. </div></div> </div> </li> </ul> </div> </div>","snippet":"Balances in investment accounts before revised estimate of residual value follow.","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:682272e6594c3ac251a4f54c0e080c66216cf1376fd1d4c6454a385ac358be3e","downloaded_from":"2026-09-10T01:58:27.334Z","last_downloaded_at":"2026-09-10T01:58:27.334Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479679","source_sha256":"6f80143c8810b647d78ac2c3bc852a858df7b3d7e2eaf33078cab74879afa830"}},{"citation":"842-50-55-14","para":"55-14","html":"<div class=\"asc-body\"><div class=\"norm-text\"> <span class=\"sfragment\" id=\"sfr_E74FA389-6E92-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">Illustrative journal entries involving a reduction in residual value follow.</span></span> <ul class=\"ul simple\" id=\"SL77920288-209974__GUID-C33357B2-0C3A-4151-A9B2-27D83D4D2DB5\"> <li class=\"li\" id=\"SL77920288-209974__SL77934193-209974\"> <div class=\"p\"> <div class=\"fig figure fignone\"> <img src=\"/asc-img/GUID-9C698711-4325-4D28-ADFF-3DAB1E04DE7B-low.gif\" altsource=\"GUID-9C698711-4325-4D28-ADFF-3DAB1E04DE7B-low.gif\" alt=\" \" loading=\"lazy\"> <span class=\"sfragment\" id=\"sfr_E74FA752-6E92-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\"></span></span> <div class=\"figcaption\"> Debit Credit Journal Entry 1 Pretax income (or loss) \" $60,314 \" Unearned and deferred income \" 27,450 \" Pretax income (loss): Balance at end of tenth year \" $9,747 \"\t(a) Revised balance \" (9,939)\"\t(b) Adjustment \" (19,686)\" Deferred investment tax credit: Balance at end of tenth year \" 29,124 \"\t(c) Revised balance \" 21,360 \"\t(d) Adjustment \" (7,764)\" Investment tax credit recognized \" $7,764 \" Estimated residual value \" 80,000 \" To record: a.\tThe cumulative effect on pretax income and the effect on future income resulting from the decrease in estimated residual value: Reduction in estimated residual value \" $80,000 \" Less portion attributable to future years (unearned and deferred income) \" (19,686)\" Cumulative effect (charged against current income) \" $60,314 \" b.\tThe cumulative and future effect of the change in allocation of the investment tax credit resulting from the reduction in estimated residual value Journal Entry 2 Deferred taxes \" 30,398 \" Income tax expense \" 30,398 \" To recognize deferred taxes for the difference between pretax accounting income (or loss) and taxable income (or loss) for the effect of the reduction in estimated residual value: Pretax accounting loss per Journal Entry 1 \" $(60,314)\" Tax income (or loss) - Difference \" $(60,314)\" \"Deferred taxes ($60,314 × 50.4%)\" \" $(30,398)\" (a)\t\"Table in paragraph 842-50-55-13, column 4.\" (b)\t\"Table in paragraph 842-50-55-12, total of column 5 minus amounts applicable to the first 10 years.\" (c)\t\"Table in paragraph 842-50-55-13, column 5.\" (d)\t\"Table in paragraph 842-50-55-12, total of column 7 minus amounts applicable to the first 10 years.\" </div></div> </div> </li> </ul> </div> </div>","snippet":"Illustrative journal entries involving a reduction in residual value follow.","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:1ca2cb6c4e92fb51d8840cc3d02e664df399fa3f2929c159aaf7e754a9e4e66d","downloaded_from":"2026-09-10T01:58:27.334Z","last_downloaded_at":"2026-09-10T01:58:27.334Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479679","source_sha256":"6f80143c8810b647d78ac2c3bc852a858df7b3d7e2eaf33078cab74879afa830"}},{"citation":"842-50-55-15","para":"55-15","html":"<div class=\"asc-body\"><div class=\"norm-text\"> <span class=\"sfragment\" id=\"sfr_E74FA830-6E92-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">Adjustment of investment accounts for revised estimates of residual value follows.</span></span> <ul class=\"ul simple\" id=\"SL77920288-209974__GUID-F307E69C-06C6-4150-8F91-9F5EF35120A2\"> <li class=\"li\" id=\"SL77920288-209974__SL77934194-209974\"> <div class=\"p\"> <div class=\"fig figure fignone\"> <img src=\"/asc-img/GUID-A9C0590E-588B-4930-87F7-E3156BA18F4F-low.gif\" altsource=\"GUID-A9C0590E-588B-4930-87F7-E3156BA18F4F-low.gif\" alt=\" \" loading=\"lazy\"> <span class=\"sfragment\" id=\"sfr_E74FABC1-6E92-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\"></span></span> <div class=\"figcaption\">\"Unearned and Deferred Income\" Net Investment Rentals Receivable Estimated Residual Value Pretax Income (Loss) Investment Tax Credit Deferred Taxes (Col. 1 + 2) less (Col. 3 + 4 + 5) \"Balances, beginning of eleventh year (table in paragraph 842-50-55-13)\" \" $77,822 \" \" $200,000 \" \" $9,747 \" \" $29,124 \" \" $230,631 \" \" $8,320 \" \"Adjustment of estimated residual value and unearned and deferred income (table in paragraph 842-50-55-14, Journal Entry 1)\" - \" (80,000)\" \" (19,686)\" \" (7,764)\" - \" (52,550)\" \"Adjustment of deferred taxes for the cumulative effect on pretax accounting income (table in paragraph 842-50-55-14, Journal Entry 2)\" - - - - \" (30,398)\" \" 30,398 \" \"Adjusted balances, beginning of eleventh year\" \" $77,822 \" \" $120,000 \" \" $(9,939)\" \" $21,360 \" \" $200,233 \" \" $(13,832)\"\t(a) (a)\t\"Table in paragraph 842-50-55-12, column 1.\"</div></div> </div> </li> </ul> </div> </div>","snippet":"Adjustment of investment accounts for revised estimates of residual value follows.","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:bea38d03ae0c9284bd56bec7ae66c56ce22a9bb73997102281f33b537954268f","downloaded_from":"2026-09-10T01:58:27.334Z","last_downloaded_at":"2026-09-10T01:58:27.334Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479679","source_sha256":"6f80143c8810b647d78ac2c3bc852a858df7b3d7e2eaf33078cab74879afa830"}},{"citation":"842-50-55-16","para":"55-16","html":"<div class=\"asc-body\"><div class=\"norm-text\"> <span class=\"sfragment\" id=\"sfr_E74FACA7-6E92-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">This Example illustrates integration of the results of a lessor's income tax accounting for leveraged leases (in accordance with the guidance in this Subtopic) with the other results of accounting for income taxes as required by Topic <a altsource=\"GUID-536ACE12-AE3B-4036-B02C-E0B2A90A3E70.ditamap\" class=\"ditamap\">740</a>.</span></span> </div> </div>","snippet":"This Example illustrates integration of the results of a lessor's income tax accounting for leveraged leases (in accordance with the guidance in this Subtopic) with the other results of accounting for income taxes as req…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:06d1022cec80ca9543eea54412291adfaefe343c05ac41da15f885bd899c84df","downloaded_from":"2026-09-10T01:58:27.334Z","last_downloaded_at":"2026-09-10T01:58:27.334Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479679","source_sha256":"6f80143c8810b647d78ac2c3bc852a858df7b3d7e2eaf33078cab74879afa830"}},{"citation":"842-50-55-17","para":"55-17","html":"<div class=\"asc-body\"><div class=\"norm-text\"> <span class=\"sfragment\" id=\"sfr_E74FADAF-6E92-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">At the end of Year 1 (the current year), an entity has two temporary differences.</span></span> </div> </div>","snippet":"At the end of Year 1 (the current year), an entity has two temporary differences.","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:b2d03b8acad2715d4993348e717371ba0db12075ecc472027a4803be45153aaa","downloaded_from":"2026-09-10T01:58:27.334Z","last_downloaded_at":"2026-09-10T01:58:27.334Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479679","source_sha256":"6f80143c8810b647d78ac2c3bc852a858df7b3d7e2eaf33078cab74879afa830"}},{"citation":"842-50-55-18","para":"55-18","html":"<div class=\"asc-body\"><div class=\"norm-text\"> <span class=\"sfragment\" id=\"sfr_E74FAEA3-6E92-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">The first temporary difference is for a leveraged lease that was entered into in a prior year. During Year 1, the enacted tax rate for Year 2 and thereafter changes from 40 percent to 35 percent.</span></span> </div> </div>","snippet":"The first temporary difference is for a leveraged lease that was entered into in a prior year. During Year 1, the enacted tax rate for Year 2 and thereafter changes from 40 percent to 35 percent.","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:c7f66a76c9eadd123ea18158149780dead07e89e41afe3f01509eda3094adc4d","downloaded_from":"2026-09-10T01:58:27.334Z","last_downloaded_at":"2026-09-10T01:58:27.334Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479679","source_sha256":"6f80143c8810b647d78ac2c3bc852a858df7b3d7e2eaf33078cab74879afa830"}},{"citation":"842-50-55-19","para":"55-19","html":"<div class=\"asc-body\"><div class=\"norm-text\"> <span class=\"sfragment\" id=\"sfr_E74FAFAB-6E92-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">After adjusting for the change in estimated total net income from the lease as a result of the change in tax rates, the components of the investment in the leveraged lease at the end of Year 1 are as follows.</span></span> <ul class=\"ul simple\" id=\"SL77920318-209974__GUID-D37BE8FC-BE6C-49C6-BE96-DFD1DA869CE5\"> <li class=\"li\" id=\"SL77920318-209974__SL77934196-209974\"> <div class=\"p\"> <div class=\"fig figure fignone\"> <img src=\"/asc-img/GUID-F4C4BF12-88B0-471E-8509-A73A2CAC66D7-low.gif\" altsource=\"GUID-F4C4BF12-88B0-471E-8509-A73A2CAC66D7-low.gif\" alt=\" \" loading=\"lazy\"> <span class=\"sfragment\" id=\"sfr_E74FB32E-6E92-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\"></span></span> <div class=\"figcaption\">Net rentals receivable plus residual value minus unearned pretax income \" $150,000 \" Reduced by: Deferred investment tax credit \" $9,000 \" Deferred tax credits \" 39,000 \" \" 48,000 \" Net investment in leveraged lease for financial reporting \" $102,000 \"</div></div> </div> </li> </ul> </div> </div>","snippet":"After adjusting for the change in estimated total net income from the lease as a result of the change in tax rates, the components of the investment in the leveraged lease at the end of Year 1 are as follows.","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:63d7436889a8ed42832f9a7383e02282d33f9b929fb5df9c7a081607757297c2","downloaded_from":"2026-09-10T01:58:27.334Z","last_downloaded_at":"2026-09-10T01:58:27.334Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479679","source_sha256":"6f80143c8810b647d78ac2c3bc852a858df7b3d7e2eaf33078cab74879afa830"}},{"citation":"842-50-55-20","para":"55-20","html":"<div class=\"asc-body\"><div class=\"norm-text\"> <span class=\"sfragment\" id=\"sfr_E74FB406-6E92-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">The second temporary difference is a $120,000 estimated liability for warranty expense that will result in a tax deduction in Year 5 when the liability is expected to be paid. Absent consideration of the deferred tax credits attributable to the leveraged lease, the weight of available evidence indicates that a valuation allowance is needed for the entire amount of the deferred tax asset related to that $120,000 deductible temporary difference.</span></span> </div> </div>","snippet":"The second temporary difference is a $120,000 estimated liability for warranty expense that will result in a tax deduction in Year 5 when the liability is expected to be paid. Absent consideration of the deferred tax cre…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:4ad1650734347f588f7ceb094edf5ce0a4b94699a42340f77a173065561e2093","downloaded_from":"2026-09-10T01:58:27.334Z","last_downloaded_at":"2026-09-10T01:58:27.334Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479679","source_sha256":"6f80143c8810b647d78ac2c3bc852a858df7b3d7e2eaf33078cab74879afa830"}},{"citation":"842-50-55-21","para":"55-21","html":"<div class=\"asc-body\"><div class=\"norm-text\"> <span class=\"sfragment\" id=\"sfr_E74FB4DE-6E92-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">The tax basis of the investment in the leveraged lease at the end of Year 1 is $41,000. The amount of the deferred tax liability for that leveraged lease that would otherwise result from the application of guidance in Topic <a altsource=\"GUID-536ACE12-AE3B-4036-B02C-E0B2A90A3E70.ditamap\" class=\"ditamap\">740</a> on income taxes is determined as follows.</span></span> <ul class=\"ul simple\" id=\"SL77920318-209974__GUID-58275B36-95A4-49E6-9C90-0F3E6B81AD26\"> <li class=\"li\" id=\"SL77920318-209974__SL77934198-209974\"> <div class=\"p\"> <div class=\"fig figure fignone\"> <img src=\"/asc-img/GUID-19BEB619-A8E0-4F8A-A7D5-EFF48DCD5776-low.gif\" altsource=\"GUID-19BEB619-A8E0-4F8A-A7D5-EFF48DCD5776-low.gif\" alt=\" \" loading=\"lazy\"> <span class=\"sfragment\" id=\"sfr_E74FB84C-6E92-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\"></span></span> <div class=\"figcaption\">Net rentals receivable plus residual value minus unearned pretax income \" $150,000 \" Temporary difference for deferred investment tax credit \" 9,000 \" \" 141,000 \" Tax basis of leveraged lease \" 41,000 \" Temporary difference \" $100,000 \" Deferred tax liability (35 percent) \" $35,000 \"</div></div> </div> </li> </ul> </div> </div>","snippet":"The tax basis of the investment in the leveraged lease at the end of Year 1 is $41,000. The amount of the deferred tax liability for that leveraged lease that would otherwise result from the application of guidance in To…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:35e5b2c06a8e8f349ab85178c535bfbc841fc3542a64498dff6a06eb5a00effb","downloaded_from":"2026-09-10T01:58:27.334Z","last_downloaded_at":"2026-09-10T01:58:27.334Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479679","source_sha256":"6f80143c8810b647d78ac2c3bc852a858df7b3d7e2eaf33078cab74879afa830"}},{"citation":"842-50-55-22","para":"55-22","html":"<div class=\"asc-body\"><div class=\"norm-text\"> <span class=\"sfragment\" id=\"sfr_E74FB924-6E92-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">Loss carryback (to Year 2) and loss carryforward (to Year 20) of the $120,000 tax deduction for warranty expense in Year 5 would offset the $100,000 of taxable amounts resulting from future recovery of the net investment in the leveraged lease over the remainder of the lease term.</span></span> </div> </div>","snippet":"Loss carryback (to Year 2) and loss carryforward (to Year 20) of the $120,000 tax deduction for warranty expense in Year 5 would offset the $100,000 of taxable amounts resulting from future recovery of the net investment…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:71f88e31b752207adcdcdb7448817a35033b57805ed212c9fc50d347dd3b3fbb","downloaded_from":"2026-09-10T01:58:27.334Z","last_downloaded_at":"2026-09-10T01:58:27.334Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479679","source_sha256":"6f80143c8810b647d78ac2c3bc852a858df7b3d7e2eaf33078cab74879afa830"}},{"citation":"842-50-55-23","para":"55-23","html":"<div class=\"asc-body\"><div class=\"norm-text\"> <span class=\"sfragment\" id=\"sfr_E74FB9F1-6E92-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">At the end of Year 1, the entity recognizes a $42,000 ($120,000 at 35 percent) deferred tax asset and a related $7,000 valuation allowance. The effect is to recognize a $35,000 net deferred tax benefit for the reduction in deferred tax credits attributable to the leveraged lease. Deferred tax credits attributable to the leveraged lease determined under the guidance in this Subtopic are $39,000. However, the deferred tax liability determined is only $35,000. The $4,000 difference is not available for offsetting.</span></span> </div> </div>","snippet":"At the end of Year 1, the entity recognizes a $42,000 ($120,000 at 35 percent) deferred tax asset and a related $7,000 valuation allowance. The effect is to recognize a $35,000 net deferred tax benefit for the reduction …","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:e25a4ebee3270d6c769bc0b214856354573749f3761c0c160c52439f342b061e","downloaded_from":"2026-09-10T01:58:27.334Z","last_downloaded_at":"2026-09-10T01:58:27.334Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479679","source_sha256":"6f80143c8810b647d78ac2c3bc852a858df7b3d7e2eaf33078cab74879afa830"}},{"citation":"842-50-55-24","para":"55-24","html":"<div class=\"asc-body\"><div class=\"norm-text\"> <span class=\"sfragment\" id=\"sfr_E74FBAC5-6E92-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">This Example illustrates how (in accordance with the guidance in paragraph <a href=\"/asc/842/50/#842-50-35-13\" class=\"xref\">842-50-35-13</a> and other paragraphs) a lessor would include advance payments and deposits in a recalculation of a leveraged lease resulting from a determination by the lessor that it would enter into a settlement of a tax position arising from a leveraged lease.</span></span> </div> </div>","snippet":"This Example illustrates how (in accordance with the guidance in paragraph 842-50-35-13 and other paragraphs) a lessor would include advance payments and deposits in a recalculation of a leveraged lease resulting from a …","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:54e027c8d83cee53abe944ea9694ab5436b2eef3fd1308f1a2750fa31b92e4f7","downloaded_from":"2026-09-10T01:58:27.334Z","last_downloaded_at":"2026-09-10T01:58:27.334Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479679","source_sha256":"6f80143c8810b647d78ac2c3bc852a858df7b3d7e2eaf33078cab74879afa830"}},{"citation":"842-50-55-25","para":"55-25","html":"<div class=\"asc-body\"><div class=\"norm-text\"> <span class=\"sfragment\" id=\"sfr_E74FBB91-6E92-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">This Example assumes that the lessor has concluded that the position originally taken on the tax return would meet the more-likely-than-not threshold in Subtopic <a altsource=\"GUID-3B0818A8-1B9D-4530-82D4-22D4284B582F.ditamap\" class=\"ditamap\">740-10</a> on income taxes. It also assumes that the lessor would conclude that the estimate of $50 for the projected lease-in, lease-out settlement is consistent with the measurement guidance in that Subtopic.</span></span> </div> </div>","snippet":"This Example assumes that the lessor has concluded that the position originally taken on the tax return would meet the more-likely-than-not threshold in Subtopic 740-10 on income taxes. It also assumes that the lessor wo…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:f4cb495ed45f83f36e8d6f7c522e19e6e880cd93c4acb7005ed8729de1762554","downloaded_from":"2026-09-10T01:58:27.334Z","last_downloaded_at":"2026-09-10T01:58:27.334Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479679","source_sha256":"6f80143c8810b647d78ac2c3bc852a858df7b3d7e2eaf33078cab74879afa830"}},{"citation":"842-50-55-26","para":"55-26","html":"<div class=\"asc-body\"><div class=\"norm-text\"> <span class=\"sfragment\" id=\"sfr_E74FBC67-6E92-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">A lessor makes an advance payment of $25 on July 1, 2007, $10 of which is estimated to be associated with issues arising from a lease-in, lease-out transaction. On July 1, 2007, the lessor changes its assumption about the timing of the tax cash flows and projects a settlement with the Internal Revenue Service on September 1, 2009. The projected settlement would result in a payment to the taxing authority of $125 of which $50 is associated with the lease-in, lease-out transaction. On July 1, 2007, when the lessor recalculates the leveraged lease, the lessor would include a $50 cash flow on September 1, 2009, as a projected outflow in the leveraged lease recalculation.</span></span> </div> </div>","snippet":"A lessor makes an advance payment of $25 on July 1, 2007, $10 of which is estimated to be associated with issues arising from a lease-in, lease-out transaction. On July 1, 2007, the lessor changes its assumption about th…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:1e92cee8b4e0ac7da8f9bc0c55fc93ac985ea8ce685f4a7959ec1402ab68fbc5","downloaded_from":"2026-09-10T01:58:27.334Z","last_downloaded_at":"2026-09-10T01:58:27.334Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479679","source_sha256":"6f80143c8810b647d78ac2c3bc852a858df7b3d7e2eaf33078cab74879afa830"}},{"citation":"842-50-55-27","para":"55-27","html":"<div class=\"asc-body\"><div class=\"norm-text\"> <span class=\"sfragment\" id=\"sfr_E74FBD2D-6E92-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">This Example illustrates one way that a lessor's investment in a leveraged lease might be valued by the acquiring entity in a business combination or an acquisition by a not-for-profit entity and the subsequent accounting for the investment in accordance with the guidance in this Subtopic. The elements of accounting and reporting illustrated for this Example are as follows:</span></span> <ol class=\"ol-norm\"> <li class=\"li-norm\"><span class=\"linum\">a</span> <div class=\"p\"> <span class=\"sfragment\" id=\"sfr_E74FBE0E-6E92-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">Acquiring entity's cash flow analysis by years (see paragraph <a href=\"/asc/842/50/#842-50-55-29\" class=\"xref\">842-50-55-29</a>)</span></span> </div> </li> <li class=\"li-norm\"><span class=\"linum\">b</span> <div class=\"p\"> <span class=\"sfragment\" id=\"sfr_E74FBEF2-6E92-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">Acquiring entity's valuation of investment in the leveraged lease (see paragraph <a href=\"/asc/842/50/#842-50-55-30\" class=\"xref\">842-50-55-30</a>)</span></span> </div> </li> <li class=\"li-norm\"><span class=\"linum\">c</span> <div class=\"p\"> <span class=\"sfragment\" id=\"sfr_E74FBFE9-6E92-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">Acquiring entity's allocation of annual cash flow to investment and income (see paragraph <a href=\"/asc/842/50/#842-50-55-31\" class=\"xref\">842-50-55-31</a>)</span></span> </div> </li> <li class=\"li-norm\"><span class=\"linum\">d</span> <div class=\"p\"> <span class=\"sfragment\" id=\"sfr_E74FC0DE-6E92-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">Journal entry for recording allocation of purchase price to net investment in the leveraged lease (see paragraph <a href=\"/asc/842/50/#842-50-55-32\" class=\"xref\">842-50-55-32</a>)</span></span> </div> </li> <li class=\"li-norm\"><span class=\"linum\">e</span> <div class=\"p\"> <span class=\"sfragment\" id=\"sfr_E74FC1CF-6E92-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">Journal entries for the year ending December 31, 1984 (Year 10 of the lease) (see paragraph <a href=\"/asc/842/50/#842-50-55-33\" class=\"xref\">842-50-55-33</a>).</span></span> </div> </li> </ol> </div> </div>","snippet":"This Example illustrates one way that a lessor's investment in a leveraged lease might be valued by the acquiring entity in a business combination or an acquisition by a not-for-profit entity and the subsequent accountin…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:c67b9f9a6a125a8aa5c48d7e0240375e9beb0e92b352de5e56738ff710d3e161","downloaded_from":"2026-09-10T01:58:27.334Z","last_downloaded_at":"2026-09-10T01:58:27.334Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479679","source_sha256":"6f80143c8810b647d78ac2c3bc852a858df7b3d7e2eaf33078cab74879afa830"}},{"citation":"842-50-55-28","para":"55-28","html":"<div class=\"asc-body\"><div class=\"norm-text\"> <span class=\"sfragment\" id=\"sfr_E74FC2C2-6E92-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">This Example has the following terms and assumptions.</span></span> <ul class=\"ul simple\" id=\"SL77920342-209974__GUID-F0C0E5D4-92DE-4564-852E-02EA65E246B7\"> <li class=\"li\" id=\"SL77920342-209974__SL77934206-209974\"> <div class=\"p\"> <div class=\"fig figure fignone\"> <img src=\"/asc-img/GUID-38F4A110-5FDC-43C8-9628-C3C7CE1D17A2-low.gif\" altsource=\"GUID-38F4A110-5FDC-43C8-9628-C3C7CE1D17A2-low.gif\" alt=\" \" loading=\"lazy\"> <span class=\"sfragment\" id=\"sfr_E74FC67D-6E92-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\"></span></span> <div class=\"figcaption\">Cost of leased asset (equipment) \"$1,000,000\" Lease term \"15 years, dating from January 1, 1975\" Lease rental payments \"$90,000 per year (payable last day of each year)\" Residual value \"$200,000 estimated to be realized 1 year after lease termination\" Financing: Equity investment by lessor \"$400,000\" Long-term nonrecourse debt \"$600,000, bearing interest at 9% and repayable in annual installments (on last day of each year) of $74,435.30\" Depreciation allowable to lessor for income tax purposes \"7-year asset depreciation range life using double-declining-balance method for the first 2 years (with the half-year convention election applied in the first year) and sum-of-years digits method for remaining life, depreciated to $100,000 salvage value\" Lessor's income tax rate (federal and state) 50.4% (assumed to continue in existence throughout the term of the lease) Investment tax credit \"10% of equipment cost or $100,000 (realized by the lessor on last day of first year of lease)\" Initial direct costs \"For simplicity, initial direct costs have not been included in the illustration\" Date of business combination \"January 1, 1982\" Nontaxable transaction Tax status of business combination Appropriate interest rate for valuing net-of-tax return on investment 4½% </div></div> </div> </li> </ul> </div> </div>","snippet":"This Example has the following terms and assumptions.","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:3cfdce8b7d3b242c2a1416708183f973c36461276b09b6035cfc6f0801e8cb0f","downloaded_from":"2026-09-10T01:58:27.334Z","last_downloaded_at":"2026-09-10T01:58:27.334Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479679","source_sha256":"6f80143c8810b647d78ac2c3bc852a858df7b3d7e2eaf33078cab74879afa830"}},{"citation":"842-50-55-29","para":"55-29","html":"<div class=\"asc-body\"><div class=\"norm-text\"> <span class=\"sfragment\" id=\"sfr_E74FC76F-6E92-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">Acquiring entity's cash flow analysis by years follows.</span></span> <ul class=\"ul simple\" id=\"SL77920342-209974__GUID-C333AD7C-039F-4747-BE05-EA3A990F1FB9\"> <li class=\"li\" id=\"SL77920342-209974__SL77934207-209974\"> <div class=\"p\"> <div class=\"fig figure fignone\"> <img src=\"/asc-img/GUID-C465A644-8FE0-41A2-B8D5-658A76FD7D0D-low.gif\" altsource=\"GUID-C465A644-8FE0-41A2-B8D5-658A76FD7D0D-low.gif\" alt=\" \" loading=\"lazy\"> <span class=\"sfragment\" id=\"sfr_E74FCBB5-6E92-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\"></span></span> <div class=\"figcaption\"> 1 2 3 4 5 6 7 Year Gross Lease Rentals and Residual Value Depreciation (for Income Tax Purposes) Loan Interest Payments \"Taxable Income (Col. 1 - 2 - 3)\" Income Tax (Charges) (Col. 4 × 50.4%) Loan Principal Payments Annual Cash Flow (Col. 1 - 3 + 5 - 6) 8 \" $90,000 \" - \" $37,079 \" \" $52,921 \" \" $(26,672)\" \" $37,357 \" \" $(11,108)\" 9 \" 90,000 \" - \" 33,717 \" \" 56,283 \" \" (28,367)\" \" 40,719 \" \" (12,803)\" 10 \" 90,000 \" - \" 30,052 \" \" 59,948 \" \" (30,214)\" \" 44,383 \" \" (14,649)\" 11 \" 90,000 \" - \" 26,058 \" \" 63,942 \" \" (32,227)\" \" 48,378 \" \" (16,663)\" 12 \" 90,000 \" - \" 21,704 \" \" 68,296 \" \" (34,421)\" \" 52,732 \" \" (18,857)\" 13 \" 90,000 \" - \" 16,957 \" \" 73,043 \" \" (36,813)\" \" 57,478 \" \" (21,248)\" 14 \" 90,000 \" - \" 11,785 \" \" 78,215 \" \" (39,420)\" \" 62,651 \" \" (23,856)\" 15 \" 90,000 \" - \" 6,145 \" \" 83,855 \" \" (42,263)\" \" 68,290 \" \" (26,698)\" 16 \" 200,000 \" \" $100,000 \" - \" 100,000 \" \" (50,400)\" - \" 149,600 \" Totals \" $920,000 \" \" $100,000 \" \" $183,497 \" \" $636,503 \" \" $(320,797)\" \" $411,988 \" \" $3,718 \" </div></div> </div> </li> </ul> </div> </div>","snippet":"Acquiring entity's cash flow analysis by years follows.","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:9b9ebaf4bb0c4372125c6cae2242531a08d2901b30051584c5de300e6f7a535a","downloaded_from":"2026-09-10T01:58:27.334Z","last_downloaded_at":"2026-09-10T01:58:27.334Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479679","source_sha256":"6f80143c8810b647d78ac2c3bc852a858df7b3d7e2eaf33078cab74879afa830"}},{"citation":"842-50-55-30","para":"55-30","html":"<div class=\"asc-body\"><div class=\"norm-text\"> <span class=\"sfragment\" id=\"sfr_E74FCC9A-6E92-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">Acquiring entity's valuation of investment in the leveraged lease follows.</span></span> <ul class=\"ul simple\" id=\"SL77920342-209974__GUID-6B663D5A-5B61-4CE7-919B-80324D333C40\"> <li class=\"li\" id=\"SL77920342-209974__SL77934208-209974\"> <div class=\"p\"> <div class=\"fig figure fignone\"> <img src=\"/asc-img/GUID-CD0AB67A-1BF2-4AE9-BB83-7FDF8E1CA1E8-low.gif\" altsource=\"GUID-CD0AB67A-1BF2-4AE9-BB83-7FDF8E1CA1E8-low.gif\" alt=\" \" loading=\"lazy\"> <span class=\"sfragment\" id=\"sfr_E74FD04F-6E92-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\"></span></span> <div class=\"figcaption\">Cash Flow Present Value at 4½% Net-of-Tax Rate \"1. Rentals receivable (net of principal and interest on the nonrecourse debt) ($15,564.70 at the end of each year for 8 years)\" \" $102,663 \" \"2. Estimated residual value ($200,000 realizable at the end of 9 years)\" \" 134,581 \" \"3. Future tax payments (various amounts payable over 9 years—see the table in paragraph 842-50-55-29)\" \" (253,489)\" Net present value \" $(16,245)\" </div></div> </div> </li> </ul> </div> </div>","snippet":"Acquiring entity's valuation of investment in the leveraged lease follows.","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:1c1812aa817a23520c9355b9a11b3a3556f812d7c1b36a51337eb63039d52043","downloaded_from":"2026-09-10T01:58:27.334Z","last_downloaded_at":"2026-09-10T01:58:27.334Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479679","source_sha256":"6f80143c8810b647d78ac2c3bc852a858df7b3d7e2eaf33078cab74879afa830"}},{"citation":"842-50-55-31","para":"55-31","html":"<div class=\"asc-body\"><div class=\"norm-text\"> <span class=\"sfragment\" id=\"sfr_E74FD122-6E92-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">Acquiring entity's allocation of annual cash flow to investment and income follows (see footnote (a)).</span></span> <ul class=\"ul simple\" id=\"SL77920342-209974__GUID-B3756998-F81F-4AA3-B3A4-BD1F735358F7\"> <li class=\"li\" id=\"SL77920342-209974__SL77934209-209974\"> <div class=\"p\"> <div class=\"fig figure fignone\"> <img src=\"/asc-img/GUID-E7FE62DD-2993-4EDA-9423-FA85FB059F2E-low.gif\" altsource=\"GUID-E7FE62DD-2993-4EDA-9423-FA85FB059F2E-low.gif\" alt=\" \" loading=\"lazy\"> <span class=\"sfragment\" id=\"sfr_E74FD482-6E92-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\"></span></span> <div class=\"figcaption\"> 1 2 3 4 5 6 Annual Cash Flow Components of Income (b) Year Net Investment at Beginning of Year \"Total from Col. 7 of the Table in Paragraph 842-50-55-29\" Allocated to Investment Allocated to Income (a) Pretax Income Tax Effect of Pretax Income 8 \" $(16,245)\" \" $(11,108)\" \" $(11,108)\" - - - 9 \" (5,137)\" \" (12,803)\" \" (12,803)\" - - - 10 \" 7,666 \" \" (14,649)\" \" (14,973)\" $324 \" $5,530 \" \" $(5,206)\" 11 \" 22,639 \" \" (16,663)\" \" (17,621)\" 958 \" 16,353 \" \" (15,395)\" 12 \" 40,260 \" \" (18,857)\" \" (20,561)\" \" 1,704 \" \" 29,087 \" \" (27,383)\" 13 \" 60,821 \" \" (21,248)\" \" (23,822)\" \" 2,574 \" \" 43,937 \" \" (41,363)\" 14 \" 84,643 \" \" (23,856)\" \" (27,439)\" \" 3,583 \" \" 61,160 \" \" (57,577)\" 15 \" 112,082 \" \" (26,698)\" \" (31,443)\" \" 4,745 \" \" 80,995 \" \" (76,250)\" 16 \" 143,525 \" \" 149,600 \" \" 143,525 \" \" 6,075 \" \" 103,698 \" \" (97,623)\" Totals \" $3,718 \" \" $(16,245)\" \" $19,963 \" \" $340,760 \" \" $(320,797)\" (a)\t\"Lease income is recognized as 4.233% of the unrecovered investment at the beginning of each year in which the net investment is positive. The rate is that rate which, if applied to the net investment in the years in which the net investment is positive, will distribute the net income (net cash flow) to those years. \" (b)\tEach component is allocated among the years of positive net investment in proportion to the allocation of net income in column 4. Journal Entry 2 in the table in paragraph 842-50-55-33 includes an example of this computation. </div></div> </div> </li> </ul> </div> </div>","snippet":"Acquiring entity's allocation of annual cash flow to investment and income follows (see footnote (a)).","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:6f464e500039e00fa1af6c1678d91f38846f2fa87797dffe22f35a7c6534c124","downloaded_from":"2026-09-10T01:58:27.334Z","last_downloaded_at":"2026-09-10T01:58:27.334Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479679","source_sha256":"6f80143c8810b647d78ac2c3bc852a858df7b3d7e2eaf33078cab74879afa830"}},{"citation":"842-50-55-32","para":"55-32","html":"<div class=\"asc-body\"><div class=\"norm-text\"> <span class=\"sfragment\" id=\"sfr_E74FD57B-6E92-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">Illustrative journal entry for recording allocation of purchase price to net investment in the leveraged lease follows.</span></span> <ul class=\"ul simple\" id=\"SL77920342-209974__GUID-716C3856-0F0D-4E12-A10A-228215510E3B\"> <li class=\"li\" id=\"SL77920342-209974__SL77934210-209974\"> <div class=\"p\"> <div class=\"fig figure fignone\"> <img src=\"/asc-img/GUID-4BC264A3-CF91-474D-AB2B-C542957B07B8-low.gif\" altsource=\"GUID-4BC264A3-CF91-474D-AB2B-C542957B07B8-low.gif\" alt=\" \" loading=\"lazy\"> <span class=\"sfragment\" id=\"sfr_E74FD90C-6E92-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\"></span></span> <div class=\"figcaption\">\"Rentals receivable (table in paragraph 842-50-55-29, total of column 1 minus residual value, minus totals of columns 3 and 6)\" \" $124,515 \" Estimated residual value (paragraph 842-50-55-28) \" 200,000 \" \"Purchase price allocation clearing account (paragraph 842-50-55-30, present value)\" \" 16,245 \" \"Unearned and deferred income (paragraph 842-50-55-30, present value, minus total of rentals receivable and estimated residual value)\" \" $340,760 \"\t</div></div> </div> </li> </ul> </div> </div>","snippet":"Illustrative journal entry for recording allocation of purchase price to net investment in the leveraged lease follows.","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:980972c1fa10e989750410817da1dd3d300d2342f7f92b065e8016c235243d54","downloaded_from":"2026-09-10T01:58:27.334Z","last_downloaded_at":"2026-09-10T01:58:27.334Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479679","source_sha256":"6f80143c8810b647d78ac2c3bc852a858df7b3d7e2eaf33078cab74879afa830"}},{"citation":"842-50-55-33","para":"55-33","html":"<div class=\"asc-body\"><div class=\"norm-text\"> <span class=\"sfragment\" id=\"sfr_E74FD9D1-6E92-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">Illustrative journal entries for year ending December 31, 19Y4, follows.</span></span> <ul class=\"ul simple\" id=\"SL77920342-209974__GUID-C9A50262-38C8-49AA-A470-09E725379242\"> <li class=\"li\" id=\"SL77920342-209974__SL77934211-209974\"> <div class=\"p\"> <div class=\"fig figure fignone\"> <img src=\"/asc-img/GUID-10B02688-1D77-4318-AFC8-08357D54A1ED-low.gif\" altsource=\"GUID-10B02688-1D77-4318-AFC8-08357D54A1ED-low.gif\" alt=\" \" loading=\"lazy\"> <span class=\"sfragment\" id=\"sfr_E74FDCBF-6E92-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\"></span></span> <div class=\"figcaption\">\"Third Year of Operation after the Business Combination (Year 10 of the Lease)\" Journal Entry 1 Cash \" $15,565 \" \"Rentals receivable (table in paragraph 842-50-55-29, column 1 minus columns 3 and 6)\" \" $15,565 \" Collection of year's net rental Journal Entry 2 Unearned and deferred income \" $5,530 \" \"Income from leveraged leases (table in paragraph 842-50-55-31, column 5)\" \" $5,530 \" Recognition of pretax income for the year allocated in the same proportion as the allocation of total income computed as follows: \"([$324 ÷ $19,963] × $340,760 = $5,530)\" Journal Entry 3 \"Deferred taxes (table in paragraph 842-50-55-29, column 5, minus table in paragraph 842-50- 55-31, column 6)\" \" $25,008 \" \"Income tax expense (table in paragraph 842-50- 55-31, column 6)\" \" 5,206 \" \"Cash (table in paragraph 842-50-55-29, column 5)\" \" $30,214 \" To record payment of tax for the year </div></div> </div> </li> </ul> </div> </div>","snippet":"Illustrative journal entries for year ending December 31, 19Y4, follows.","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:65d0eda713a52f242c13ea585edef3423f51495fb49e4de2f37461864f7a455b","downloaded_from":"2026-09-10T01:58:27.334Z","last_downloaded_at":"2026-09-10T01:58:27.334Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479679","source_sha256":"6f80143c8810b647d78ac2c3bc852a858df7b3d7e2eaf33078cab74879afa830"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:dbe9f3296ad26b5e3b49852f75bbb1cc6ce52e4990acb5f1ccfc61768c9a1961","downloaded_from":"2026-09-10T01:58:27.334Z","last_downloaded_at":"2026-09-10T01:58:27.334Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479679","source_sha256":"6f80143c8810b647d78ac2c3bc852a858df7b3d7e2eaf33078cab74879afa830"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:0ddd20b3dc68426adff66bf0277adacd268f237fc6461b1483bfdec8098fe1db","downloaded_from":"2026-09-10T01:58:27.334Z","last_downloaded_at":"2026-09-10T01:58:27.334Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479679","source_sha256":"6f80143c8810b647d78ac2c3bc852a858df7b3d7e2eaf33078cab74879afa830"}},{"number":"S00","label":"SEC 00 Status","anchor":"sec-00-status","is_sec":true,"groups":[{"block":null,"heading":null,"paragraphs":[{"citation":"842-50-S00-1","para":"S00-1","html":"<div class=\"asc-body\"><div class=\"norm-text\">The following table identifies the changes made to this Subtopic.</div><div class=\"norm-text\"><table class=\"asc-table\" id=\"SL113985846-223752\"><tr><td class=\"entry\"><strong class=\"ph b\">Paragraph</strong></td><td class=\"entry\"><strong class=\"ph b\">Action</strong></td><td class=\"entry\"><strong class=\"ph b\">Accounting Standards Update</strong></td><td class=\"entry\"><strong class=\"ph b\">Date</strong></td></tr><tr><td class=\"entry\"></td><td class=\"entry\"></td><td class=\"entry\"></td><td class=\"entry\"></td></tr><tr><td class=\"entry\"><a href=\"/asc/842/50/#842-50-S35-1\" class=\"xref\">842-50-S35-1</a></td><td class=\"entry\">Added</td><td class=\"entry\"><a href=\"/updates/asu-2017-13/\" class=\"xref\">Accounting Standards Update No. 2017-13</a></td><td class=\"entry\">09/29/2017</td></tr><tr><td class=\"entry\"><a href=\"/asc/842/50/#842-50-S99-1\" class=\"xref\">842-50-S99-1</a></td><td class=\"entry\">Added</td><td class=\"entry\"><a href=\"/updates/asu-2017-13/\" class=\"xref\">Accounting Standards Update No. 2017-13</a></td><td class=\"entry\">09/29/2017</td></tr></table></div></div>","snippet":"The following table identifies the changes made to this Subtopic.\nParagraph | Action | Accounting Standards Update | Date |\n| | | |\n842-50-S35-1 | Added | Accounting Standards Update No. 2017-13 | 09/29/2017 |\n842-50-S99…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:a236ffb9a07df26b1fea09149fefbb24375e9b0edc996d2ac68fe6ad73c71ea2","downloaded_from":"2026-09-10T01:58:31.075Z","last_downloaded_at":"2026-09-10T01:58:31.075Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147483637","source_sha256":"8d8beb84e803d1626e7c00b42e79b256f75802a3b8b4dcd3c876eea2abf68de4"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:04eafd5d6904896ef0b69d32d1a6c729f4f5a1973b81912ebfe720fdbb62c057","downloaded_from":"2026-09-10T01:58:31.075Z","last_downloaded_at":"2026-09-10T01:58:31.075Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147483637","source_sha256":"8d8beb84e803d1626e7c00b42e79b256f75802a3b8b4dcd3c876eea2abf68de4"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:305fac1c53f6557e259128613db46c23511be19fa8a476cc7a53fdc8ccd2dc86","downloaded_from":"2026-09-10T01:58:31.075Z","last_downloaded_at":"2026-09-10T01:58:31.075Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147483637","source_sha256":"8d8beb84e803d1626e7c00b42e79b256f75802a3b8b4dcd3c876eea2abf68de4"}},{"number":"S35","label":"SEC 35 Subsequent Measurement","anchor":"sec-35-subsequent-measurement","is_sec":true,"groups":[{"block":null,"heading":"Effect of a Change in Tax Law or Rates on Leveraged Leases","paragraphs":[{"citation":"842-50-S35-1","para":"S35-1","html":"<div class=\"asc-body\"><div class=\"norm-text\"> <span class=\"sfragment\" id=\"sfr_E7703633-6E92-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">See paragraph <a href=\"/asc/842/50/#842-50-S99-1\" class=\"xref\">842-50-S99-1</a>, SEC Observer Comment: Effect of a Change in Tax Law or Rates on Leverage Leases, for SEC Staff views on the effect of a change in tax law or rate on leveraged leases. </span></span> </div> </div>","snippet":"See paragraph 842-50-S99-1, SEC Observer Comment: Effect of a Change in Tax Law or Rates on Leverage Leases, for SEC Staff views on the effect of a change in tax law or rate on leveraged leases.","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:e085841c01cec453e96cd150dac3032d84e73f810228f56089f8a659d2f85033","downloaded_from":"2026-09-10T01:58:34.114Z","last_downloaded_at":"2026-09-10T01:58:34.114Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147483631","source_sha256":"5a255a7e03a475a21ceeba5a92f96fc50230e42e99a0a650da5dd08c174a66cf"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:dd55cbcc92bab5d86d0e6b2d12d94ee27918e7866b73ae59625ecea04ac14b24","downloaded_from":"2026-09-10T01:58:34.114Z","last_downloaded_at":"2026-09-10T01:58:34.114Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147483631","source_sha256":"5a255a7e03a475a21ceeba5a92f96fc50230e42e99a0a650da5dd08c174a66cf"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:2e61f01ef564f17ce29e496316457618461f7ac695ca0286407adf02cc086562","downloaded_from":"2026-09-10T01:58:34.114Z","last_downloaded_at":"2026-09-10T01:58:34.114Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147483631","source_sha256":"5a255a7e03a475a21ceeba5a92f96fc50230e42e99a0a650da5dd08c174a66cf"}},{"number":"S99","label":"SEC 99 SEC Materials","anchor":"sec-99-sec-materials","is_sec":true,"groups":[{"block":null,"heading":"SEC Staff Guidance","paragraphs":[{"citation":"842-50-S99-1","para":"S99-1","html":"<div class=\"asc-body\"><div class=\"norm-text\">The following is the text of SEC Observer Comment: Effect of a Change in Tax Law or Rates on Leveraged Leases.<ul class=\"ul simple\" id=\"SL113971989-223749__GUID-1E82D3A7-038D-402F-9FA8-0D9939B2367F\"><li class=\"li\" id=\"SL113971989-223749__SL113971992-223749\"><div class=\"p\"><span class=\"sfragment\" id=\"sfr_E77EF047-6E92-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">Section <a altsource=\"GUID-F6A5369A-D349-4B44-92A7-76F236403956.ditamap\" class=\"ditamap\">842-50-35</a> requires that all components of a leveraged lease be recalculated from inception of the lease based on the revised after-tax cash flows arising from the change in the tax law, including revised tax rates. The difference between the amounts originally recorded and the recalculated amounts must be included in income of the year in which the tax law is enacted. </span></span></div></li><li class=\"li\" id=\"SL113971989-223749__SL113971994-223749\"><div class=\"p\"><span class=\"sfragment\" id=\"sfr_E77EF19E-6E92-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">This accounting may have distortive effects on the ratio of earnings to fixed charges (\"the ratio\") as calculated. For example, a favorable after-tax effect might consist of an unfavorable adjustment to pretax income that is more than offset by a favorable adjustment to income tax expense. In those circumstances, despite the overall favorable effect, the ratio as calculated pursuant to the applicable instructions to Item 503(d) of Regulation S-K would be affected negatively because the \"earnings\" component of the ratio is based on pretax income. </span></span></div></li><li class=\"li\" id=\"SL113971989-223749__SL113971995-223749\"><div class=\"p\"><span class=\"sfragment\" id=\"sfr_E77EF2C7-6E92-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">In filings with the Commission the SEC staff will expect the cumulative effect on pretax income and income tax expense, if material, to be reported as separate line items in the income statement. SEC staff will not object to exclusion of an unfavorable pretax adjustment from the \"earnings\" component of the ratio, in cases in which the after-tax effect is favorable, provided that (1) such exclusion is adequately identified and explained in connection with all disclosures and discussions relating to the ratio and (2) supplemental disclosure is made of the ratio as calculated in accordance with the applicable instructions. </span></span></div></li></ul></div> </div>","snippet":"The following is the text of SEC Observer Comment: Effect of a Change in Tax Law or Rates on Leveraged Leases.\nSection 842-50-35 requires that all components of a leveraged lease be recalculated from inception of the lea…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:b74ceca5e9fd4f2bc8a1057edf93f2271d6815bb0230418dca12c8da18abd445","downloaded_from":"2026-09-10T01:58:37.823Z","last_downloaded_at":"2026-09-10T01:58:37.823Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147483630","source_sha256":"86374a51c631701dbb5487b5f764cf80d31aa338b37eb085bfd71abb51414e3d"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:2957133badbd3b7087b35b4d32045c3161e97f6ad4b427dd1e363a37c50b470a","downloaded_from":"2026-09-10T01:58:37.823Z","last_downloaded_at":"2026-09-10T01:58:37.823Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147483630","source_sha256":"86374a51c631701dbb5487b5f764cf80d31aa338b37eb085bfd71abb51414e3d"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:d60fdb789b4ab9c804c9ecc0e0953590f2a0b23d49e6245035734a93c0d097e6","downloaded_from":"2026-09-10T01:58:37.823Z","last_downloaded_at":"2026-09-10T01:58:37.823Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147483630","source_sha256":"86374a51c631701dbb5487b5f764cf80d31aa338b37eb085bfd71abb51414e3d"}}],"enrichment":{"summary":"ASC 842-50 preserves the legacy leveraged lease accounting model, but only for leases that existed at the ASC 842 transition date and meet the criteria in 842-10-65-1(z) — no new leveraged leases may be created. A lessor records a single net investment consisting of rentals receivable (net of nonrecourse debt service), investment-tax-credit receivable, estimated residual value, and unearned/deferred income (842-50-25-1; 842-50-30-1), and recognizes income only in years when the net investment (less related deferred taxes) is positive, using the rate of return that distributes total net income to those years (842-50-35-2). Important assumptions, including residual value and the projected timing of income tax cash flows, must be reviewed at least annually, with any change triggering recalculation from lease inception and immediate gain or loss recognition (842-50-35-6 through 35-8).","key_points":["The Subtopic applies only to leases meeting transition paragraph 842-10-65-1(z); exercise of a previously not-reasonably-assured extension option is treated as a lease modification under that paragraph (842-50-15-1).","The lessor's net investment in a leveraged lease is the net of rentals receivable (net of the portion applicable to principal and interest on the nonrecourse debt), the investment-tax-credit receivable, the estimated residual value, and unearned and deferred income (842-50-25-1; 842-50-30-1).","Periodic income is computed on the net investment less related deferred taxes, using a rate of return — distinct from the interest rate implicit in the lease — applied only in years in which the net investment is positive (842-50-35-2).","Net income comprises pretax lease income (or loss), investment tax credit, and the tax effect of pretax lease income (or loss); any loss that the method would allocate to future years must be recognized immediately (842-50-35-3 through 35-5).","Residual value and other important assumptions (including the projected timing of income tax cash flows) must be reviewed at least annually; a decline in residual value that is other than temporary, or a change in total estimated net income, requires recalculation from inception with a gain or loss recognized in the year of the change, and upward adjustments of estimated residual value are prohibited (842-50-35-6 through 35-9; 35-19).","Recalculations reflect tax positions under 740-10-25-6, 740-10-30-7, and 740-10-40-2, exclude interest and penalties, and treat advance payments/deposits with a taxing authority as part of the projected settlement amount rather than actual cash flows (842-50-35-12 through 35-15).","Presentation requires related deferred taxes to be shown separately from the net investment on the balance sheet, and pretax leveraged lease income, its tax effect, and investment tax credit recognized to be shown separately in the income statement or notes; components of the net investment are disclosed if leveraged leasing is a significant part of the lessor's business (842-50-45-1; 842-50-50-1)."],"categories":["Leases","Subsequent measurement","Income taxes","Presentation"],"audience_level":"advanced","student_note":"This is grandfathered legacy guidance: ASC 842 prohibits new leveraged leases, so 842-50 applies only to pre-transition arrangements that were not modified. The classic exam trap is the asymmetry in residual value — an other-than-temporary decline forces a recalculation from lease inception with immediate gain/loss, but upward revisions of estimated residual value are never permitted (842-50-35-8(c)).","related_topics":["842-10","842-30","740-10","805-60","326-20","805"],"key_concepts":["leveraged lease","net investment in leveraged lease","nonrecourse debt","unearned and deferred income","investment tax credit","residual value review and recalculation","rate of return on positive net investment years","deferred taxes on leveraged leases"],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:58145ef72d3ee7531faef86d571d8ee573abf12cd2ea6b2acbd9428178653c7f","downloaded_from":"2026-09-10T01:58:02.364Z","last_downloaded_at":"2026-09-10T01:58:37.823Z","date_scope":"source_page_range","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps"}},"related":[{"number":"842-20","title":"Lessee","topic_title":"Leases","score":0.7617,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:187568482e96fc4b3ad2dacdad5293309ba9785a13ef2e40e222e172cff2b040","downloaded_from":"2026-09-10T01:56:28.044Z","last_downloaded_at":"2026-09-10T01:57:02.089Z","date_scope":"source_page_range","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps"}},{"number":"323-740","title":"Income Taxes—Proportional Amortization Method","topic_title":"Investments—Equity Method and Joint Ventures","score":0.758,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:af5252a250f5cbe2568a2f8508561a3b4c939256bee79efb34c60416d3ecd71d","downloaded_from":"2026-09-09T23:41:07.480Z","last_downloaded_at":"2026-09-09T23:41:51.330Z","date_scope":"source_page_range","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps"}},{"number":"842-980","title":"Regulated Operations","topic_title":"Leases","score":0.7526,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:946402916d9199d5d59d5c0f7c61e45b7304bc4a99e86c6f12628c202a21d0b6","downloaded_from":"2026-09-10T01:58:56.654Z","last_downloaded_at":"2026-09-10T01:59:18.312Z","date_scope":"source_page_range","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps"}},{"number":"740-10","title":"Overall","topic_title":"Income Taxes","score":0.7407,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:b5d624388a47229e76e5d5c493bc1950619daf94b3bcf2210de608aa0ba134bd","downloaded_from":"2026-09-10T01:16:12.781Z","last_downloaded_at":"2026-09-10T01:17:20.090Z","date_scope":"source_page_range","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps"}},{"number":"842-10","title":"Overall","topic_title":"Leases","score":0.7376,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:1b8283f4fb34ae86d6673a737189d8b02297d0c39218dc39c5965b15b3c23355","downloaded_from":"2026-09-10T01:55:43.879Z","last_downloaded_at":"2026-09-10T01:56:24.118Z","date_scope":"source_page_range","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps"}},{"number":"718-740","title":"Income Taxes","topic_title":"Compensation—Stock Compensation","score":0.7312,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:601a9f75e4aa5384bd87c57148f3849ea1783dc545d0379cf185c85c7ce2bca9","downloaded_from":"2026-09-10T01:06:22.798Z","last_downloaded_at":"2026-09-10T01:06:52.467Z","date_scope":"source_page_range","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps"}}],"prev":{"number":"842-40","title":"Sale and Leaseback Transactions","topic_title":"Leases","provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:057b8206d74ec5dfc6e2d0c2d575439b0fbccc007d16db447a45f7d25c1bbc20","downloaded_from":"2026-09-10T01:57:35.813Z","last_downloaded_at":"2026-09-10T01:57:59.856Z","date_scope":"source_page_range","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps"}},"next":{"number":"842-974","title":"Real Estate—Real Estate Investment Trusts","topic_title":"Leases","provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:5de4aa4c23a2c38bd59ce3c5f334de5e423c3728e4f8a26eceed6425640605d7","downloaded_from":"2026-09-10T01:58:41.636Z","last_downloaded_at":"2026-09-10T01:58:53.121Z","date_scope":"source_page_range","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps"}},"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:af08ac5b826a5a7829e90a66c4ce49088ef6fe930af06a51c157dea07ea4e02e","downloaded_from":"2026-09-10T01:58:02.364Z","last_downloaded_at":"2026-09-10T01:58:37.823Z","date_scope":"source_page_range","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps"}}