Accounting Research Group Project: Operating Lease $(leassee)$

Part $A.$ FASB Codification Research

The FASB codification's topic $842$ governs the accounting for leases. $In$ this part $of$ the project,

you will investigate the codification and answer the following questions. Please make sure $to$

clearly quote relevant text from the codification $to$ support your answers.

Using the codification's search tool, identify the specific paragraphs that discuss how $to$

classify a lease. Where $in$ the codification are the five criteria $of$ lease classification $we$

discussed $in$ class? Can a lease change classification subsequently $(we$ did not discuss

this $in$ class$)?$

Demonstration problem $15-3(lessee$ version and lessor version$)is$ related $to$ the

accounting for operating leases. For this problem, provide detailed explanation for the

solutions from the lessee's perspective. You should cite relevant text from the codification

$to$ support your explanation. $Asan$ example, when you discuss the calculation $of$ initial

lease payable, you can cite the following text from paragraph $842-20-30-3$ about discount

rate: "A lessee should use the rate implicit $in$ the lease whenever that rate $is$ readily

determinable. $If$ the rate implicit $in$ the lease $is$ not readily determinable, a lessee uses its

incremental borrowing rate".

For Demonstration problem $15-3,$ provide detailed explanation for the solutions from the

lessor's perspective. Again, make sure you cite relevant text from the codification $to$

support your explanation.