We have a lease that includes the office building as well as some specialized equipment to manufacture our products. The rent associated with the equipment is actually greater than the rent for the office. How do we account for this?
Building and Equipment Lease
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There are multiple lease components. You would need to allocate the rent to each component on a relative fair value basis and then assess the accounting for each component separately. The building component would likely be an operating lease and the equipment component would likely be a finance lease, so the accounting would be different for each.
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There are multiple lease components. You would need to allocate the rent to each component on a relative fair value basis and then assess the accounting for each component separately. The building component would likely be an operating lease and the equipment component would likely be a finance lease, so the accounting would be different for each.