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Presentation and disclosure

f. Net gain or loss recognized from sale and leaseback transactions in accordance with paragraph
842-40-25-4.

g. Amounts segregated between those for finance and operating leases for the following items:

1. Cash paid for amounts included in the measurement of lease liabilities, segregated between
operating and financing cash flows

2. Supplemental noncash information on lease liabilities arising from obtaining right-of-use
assets

3. Weighted-average remaining lease term

4. Weighted-average discount rate.

The amount of lease cost will not always be the same as the lease expense recognized. Lease cost may
include items not recognized as lease expense (e.g., amounts capitalized as part of the cost of
inventory).

A lessee should also disclose a maturity analysis of its finance lease and operating lease liabilities,
separately showing:

□ The undiscounted cash flows on an annual basis for a minimum of each of the next five years

□ The sum of the undiscounted cash flows for all years thereafter

□ A reconciliation of the undiscounted cash flows to the discounted finance lease liabilities and
operating lease liabilities recognized in the statement of financial position

ASC 842-20-55-53 provides an example of this disclosure requirement.

9.3 Lessors

Lessors are required to classify leases as sales-type, direct financing, or operating leases.

9.3.1 Balance sheet presentation

A lessor’s presentation of its leased asset is dependent on how the lease is classified.

9.3.1.1 Sales-type and direct financing leases

In a sales-type or direct financing lease, the lessor derecognizes the leased asset and recognizes a lease
investment on its balance sheet as discussed in LG 4.3.1. A lessor’s aggregate net investment should be
presented separate from other assets on the lessor’s balance sheet.

Lease assets should be classified as current or noncurrent. See FSP 2 for information on balance sheet
classification.

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