Pwc's Cfodirect Podcast

Text us your thoughts on this episodeThis first episode in a miniseries on lease accounting focuses on lease classification. We provide an overview of the differences between finance and operating leases and discuss the criteria for classifying leases.In this episode, you’ll hear:3:30 - An overview of the key differences between finance and operating leases, including expense recognition and cash flow classification5:15 - A discussion of how to determine if a lease should be classified as finance or operating including:6:35 - Lease commencement date considerations10:20 - Whether a lease contains a single asset or multiple assets14:41 - Whether the lease term is a major part of the economic life of the asset22:55 - The lease payment criterion, including a breakdown of lease payments and the appropriate discounting methodology41:56 - Highlights of other classification criteria such as title transfer, purchase options, and alternative useFor more information, read chapter 3 of our Leases guide. Additionally, fol