Lessor Accounting Model

The Lessor Accounting Model outlines how companies that lease assets to others (lessors) should record these leases in their financial statements. Under this model, lessors recognize lease income over the lease term, along with the cost of the leased asset. Depending on the lease type (operating or finance), they may record the leased asset on their balance sheet and recognize income differently. The goal is to provide transparent and consistent reporting of lease activities, ensuring users understand the lessor’s financial position and the income generated from leasing assets.