We are considering leasing R&D equipment.
I am wondering if we should consider the leasing guidance (FAS 13) if we lease equipment used for R&D purposes as R&D is typically expensed as incurred. Should we go through the FAS 13 criteria to determine whether it qualifies as a lease and then whether it should be classified as a capital or an operating lease?
Grace;
Yes and yes. I believe you may end up expensing it in the end anyhow, but you still need to go through the motions on properly classifying it prior to the decision to expense.
Cheers,
KP
1
Hi Keith,
Thanks for your response.
Just to make sure I am clear, the reason you think we may end up expensing anyway is because we may end up classifying the equipment a an operating lease?
Best,
Grace
Have you checked the latest guidance on lease
If you have already decided to lease VS buy or rent, then the 4 criteria within FAS13 will help you figure out if it is a capital or operating lease.
Ray is right. There is no exclusion from capitalization for short-term leases (typically 12 months or less)
