Running the FAS 13 test on a single lease

Use this procedure to assign a classification to imported leases.

You must create a lease and an associated lease payment schedule before you can run a FAS 13 test.

  1. Select Leases.
  2. Select the lease to apply FAS 13.
  3. Click Overrides.
  4. Select Yes in the Perform Classification Test field.
  5. Click OK.
  6. Click Save.
  7. Select the Classification tab.
    This information is displayed in the classification test results:
    Classification
    This field shows the lease classification.
    Ownership
    If the ownership of the leased property is transferred to the lessee at the end of the lease, then Yes is displayed. The lease classification is Finance.
    Bargain Purchase Option
    If a bargain purchase option is available on the lease, then this field is Yes and the classification is Finance.
    Economic Life to Lease Term
    If the lease term at inception is greater than or equal to 75 percent of the estimated economic life of the leased property, then this field is Yes . The lease is Finance. This is true regardless of whether the lease is purchased or owned by the lessee at the end of the lease.
    Present Value to Market Value
    If the present value of the minimum lease payments is 90 percent or more of the fair market value at the inception of the lease, then this field Yes. The lease is Finance. This is true regardless of whether the lease is purchased or owned by the lessee at the end of the lease.
    Net Present Value
    The minimum lease payments that are used in the Present Value to Market Value calculation.
    Lease Obligation
    The smaller amount of the minimum lease payments or the fair market value of the lease at inception. This is the fair market value that is used in the Present Value to Market Value calculation.