In a sales type lease, Schweser has added the gross profit from leasing the asset in the first year to CFO and deducted an equivalent amt from CFI although this is not a real cash flow. Why is it necessary?
It says in the Stalla notes: Under the Sale type lease - Net investment in the lease is reported as a CFI outflow while the Gross Profit on sale of the leased asset is reported as a CFO Inflow There is a footnote – This is the treatment described in the CFA Institute source reading. This is inconsistent with US GAAP.
Oh ok thanks