Quick Finance Tip - Following a Lease Through Sales Type Leases For A Lessor

​A Sales Type Lease results when the Present Value of lease payments is greater than the Carrying Value. Ultimately, the lessor is providing a sale of an asset to the lessee, and the revenues earned by the lessor are operating in nature. The recognition of revenue here will be both sales and interest revenue. If the asset is transferred to the lessee, in this case, the asset will fall of the balance sheet, but so will the liability of the asset. Keeping all else constant, the revenue and expense recognition from one side of the equation was meant with the increases or decreases in cash from the other.