Economics and Reporting of Sale-Leaseback Transactions from the Seller-Lessee Perspective
Date of Submission
Master of Science in Accounting
Call No. at the Univ. of New Haven Library
AS 36 .N29 Acc. 1993 no.2
Sale-Leaseback assists businesses in their quest to augment expected utility by allocating resources to the most promising investment opportunities. Sale-leaseback provides the facility to businesses to generate cash flows by selling a particular asset and in the mean time retain the benefit of using the same asset. The Financial Accounting Standard Board (FASB) issued Statement No. 98, \"Accounting for leases: Sale-leaseback Transactions Involving Real Estate," in May V 1988 in order to standardize the accounting approach of sale-leaseback transactipns. This research paper endeavors to determine to what extent the newly issued standard has assisted businesses in standardizing the accounting approach of sale-leaseback transactions. Furthermore, it presents the economic and tax consequences of such transactions from a seller-lessee perspective. The main outcome of the paper is that statement 98 does enhance the presentation of financial data regarding the sale-leaseback in accounting statements by enforcing the criteria that would have to be followed step by step in similar types of sale-leaseback transactions. It does reduce the flexibility of structuring a transaction. However, the main flaw of this standard is that it is much more complicated and arduous to follow.
Mirza, Syed M., "Economics and Reporting of Sale-Leaseback Transactions from the Seller-Lessee Perspective" (1993). Master's Theses. 96.