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Lease Classification: Capital vs. Operating

This template may be used to determine whether a lease should be treated as a capital lease. It applies each of the tests for capitalization specified in FASB ASC 840,
Leases
, documents the results and reaches a conclusion, and prepares an illustrative note disclosure.
While the same basic principles apply to the classification of all types of leases, FASB ASC 840 adds certain complexities and exceptions for real estate leases. Because this template does not consider those exceptions, it should not be used for leases involving real estate.

Entering Data

All of the information needed to determine the lease's classification is entered on the Input worksheet. The first section of the worksheet requests information for report headers -- the organization's name, description of the leased property, preparer's name, and lease date. It then asks the questions shown in the list below. As questions are answered, red, italicized comments may appear prompting you to skip certain questions or to proceed to another section within the worksheet. Thus, it may not be necessary to answer all of the questions on the Input worksheet.
After entering the requested information, click the Conclusion worksheet tab to see how the lease should be classified.