Sales-type lease

Here is a memorandum of a transaction called by "sales-type lease." The other day, I picked up Direct financing lease(-> DFL) in this blog.This sales-type lease is similar to DFL, and their difference comes from a plug of cost of sales and the FMV of the assets. If there is such a difference, we would classify as sales-type lease and DFL is classified if cost of sales and the FMV of the assets coincide. Note that both of leases are lessor-side transactions and the lessee (in opposite side) is called capital lease in USGAAP.

I won't write journal entries here, because they're slightly complicated, but the minimum information to write them are the following 2 amounts: One is lease payments in each period (including residual value), and the other is information of cost of sales.

Finally, I note on residual value. If it is guaranteed, we count it in sales revenue at the inception of the lease. On the other hand, if it is NON-guaranteed, we have to deduct PV of the residual value from both of sales revenue and cost of sales, caz there's less certainly that unguaranteed residual value will be realized..