With a capital lease: for sales type and direct financing, does the lessor recognise lease/rental income in the income statement over the term of the lease? Or does the income statement for a lessor only have interest income?
I wrote an article that has the lease calculations for the lessee and for the lessor: http://financialexamhelp123.com/leases-ii-calculations/.
That was helpful, thanks but just to clarify: 1. For a lessor the lease income they receive is recognised as interest income in the income statement? 2. This lease income is separated on the cash flow statement into interest and principal?
For an operating lease it’s all rental income.
For a sales-type finance lease there’s initial sales revenue plus ongoing interest income and principal (sales) income.
For a direct financing lease, it’s all interest income and principal (sales) income (but no initial sales revenue).