Summary of Statement No. 29
Determining Contingent Rentals--an amendment of FASB Statement No. 13 (Issued 6/79)
Summary
The Board has been asked to reconsider the definition of
contingent rentals in FASB Statement No. 13, "Accounting for
Leases," because differing views about the meaning of that
definition result in similar leases being accounted for
differently, for example, as a capital lease by one lessee and as
an operating lease by another lessee. This Statement defines
contingent rentals as the increases or decreases in lease payments
that result from changes occurring subsequent to the inception of
the lease in the factors on which lease payments are based. Lease
payments that depend on a factor that exists and is measurable at
the inception of the lease, such as the prime interest rate, would
be included in minimum lease payments based on the factor at the
inception of the lease. Lease payments that depend on a factor that
does not exist or is not measurable at the inception of the lease,
such as future sales volume, would be contingent rentals in their
entirety and, accordingly, would be excluded from minimum lease
payments and included in the determination of income as they
accrue.