so I asked this already in two threads now (third time’s a charm) but have been receiving conflicting answers (conflicting with my understanding of the topic that is).
I am wondering how capitalizing a lease affects cash flow statements. According to the 2016 curriculum this is what I think should happen:
Say I am capitalizing a lease, then the Cash Flow effects will be (according to US GAAP):
Principal Payments: CFF
Interest Payments: CFO (under IFRS, these could alternatively be under CFF)
no effect on CFI
In the two threads where I asked this before, it was mentioned that interest payments would be under CFF and principal payments would be CFI , which I think is wrong.
Can someone clarify whether I am missing something here? Should there be an effect on CFI?? In Reading 32 Exhibit 2 (p.603) from the 2016 curriculum it actually does NOT mention that capitalized leases affect CFI, but instead only affect CFF and CFO:
“…Finance Lease under IFRS (capital lease under US GAAP):…
Reduction of lease liability is a financing cash outflow Interest portion of lease payment is either an operating or financing cash outflow under IFRS and an operating cash outflow under US GAAP….”
The previous threads (in case someone wants to have a look at the previous discussions):
If someone could shed a light on this, I would very thankful!!!