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Presentation and disclosure

9.3.4 Disclosure

ASC 842-30-50-3 and 50-7 requires a lessor to disclose the following qualitative items.

ASC 842-30-50-3

A lessor shall disclose both of the following:
a. Information about the nature of its leases, including:
1. A general description of those leases

2. The basis and terms and conditions on which variable lease payments are determined
3. The existence and terms and conditions of options to extend or terminate the lease

4. The existence and terms and conditions of options for a lessee to purchase the underlying
asset.

b. Information about significant assumptions and judgments made in applying the requirements of
this Topic, which may include the following:

1. The determination of whether a contract contains a lease (as described in paragraphs 842-10-
15-2 through 15-27)

2. The allocation of the consideration in a contract between lease and nonlease components (as
described in paragraphs 842-10-15-28 through 15-32)

3. The determination of the amount the lessor expects to derive from the underlying asset
following the end of the lease term.

ASC 842-30-50-7
A lessor shall disclose information about how it manages its risk associated with the residual value of
its leased assets. In particular, a lessor should disclose all of the following:
a. Its risk management strategy for residual assets
b. The carrying amount of residual assets covered by residual value guarantees (excluding guarantees
considered to be lease payments for the lessor, as described in paragraph 842-30-30-1(a)(2))
c. Any other means by which the lessor reduces its residual asset risk (for example, buyback
agreements or variable lease payments for use in excess of specified limits).

9.3.4.1 Sales-type and direct financing leases

In addition to the general disclosures discussed previously, ASC 842-30-50-9 and 50-10 require
additional disclosures for sales-type and direct financing leases. We do not believe it is necessary to
present these disclosure separately for sales-type and direct financing leases.

ASC 842-30-50-9 requires a lessor to disclose significant changes in the balance of its unguaranteed
residual assets related to both sales-type and direct financing leases. It also requires a lessor in a direct
financing lease to disclose the amount of deferred selling profit.

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