Summary of Statement No. 27
Classification of Renewals or Extensions of Existing Sales-Type or Direct Financing Leases--an amendment of FASB Statement No. 13 (Statement Issued 5/79)
Summary
This Statement modifies FASB Statement No. 13, "Accounting
for Leases," to require a lessor to classify a renewal or an
extension of a sales-type or direct financing lease as a sales-type
lease if the lease would otherwise qualify as a sales-type lease
and the renewal or extension occurs at or near the end of the lease
term. If the renewal or extension occurs at other times during the
lease term, the prohibition in Statement No. 13 against classifying
the renewal or extension as a sales-type lease continues in effect.
Furthermore, this Statement does not affect the classification of a
lease that results from a change in the provisions of an existing
lease or the accounting for changes in the provisions of a lease if
those changes occur during the lease term.