However, under paragraph 26 of Statement 13, if certain criteria are met, the lessor shall account for real estate leases either as a sales-type lease or as a direct financing lease as appropriate under subparagraphs 6(b)(i) and 6(b)(ii) of Statement 13; otherwise, the lease shall be accounted for as an operating lease. Because leveraged leases are described only in subparagraph 6(b)(iii) and not in the subparagraphs cited above, some believe paragraph 26 precludes real estate leases from being classified as leveraged leases. Paragraph 34 of Statement 13 states that, if certain criteria are met, the purchaser-lessor shall account for sale-leaseback transactions as a purchase and a direct financing lease; otherwise, the lease shall be accounted for as a purchase and an operating lease. Because direct financing leases and leveraged leases are distinct classifications in paragraph 6, some believe that paragraph 34 precludes sale-leaseback transactions from being classified as leveraged leases. The issue is whether Statement 13 precludes real estate leases and leases in sale-leaseback transactions from being classified as leveraged leases if the criteria in paragraph 42 are met. Copyright © 1985, Financial Accounting Standards Board Not for redistributio
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