Summary of Statement No. 27

Classification of Renewals or Extensions of Existing Sales-Type or Direct Financing Leases—an amendment of FASB Statement No. 13 (Statement Issued 5/79)


This Statement modifies FASB Statement No. 13, "Accounting for Leases," to require a lessor to classify a renewal or an extension of a sales-type or direct financing lease as a sales-type lease if the lease would otherwise qualify as a sales-type lease and the renewal or extension occurs at or near the end of the lease term. If the renewal or extension occurs at other times during the lease term, the prohibition in Statement No. 13 against classifying the renewal or extension as a sales-type lease continues in effect. Furthermore, this Statement does not affect the classification of a lease that results from a change in the provisions of an existing lease or the accounting for changes in the provisions of a lease if those changes occur during the lease term.