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FASB Staff Position FIN46-6, “Effective Date of FASB Interpretation



a lessee might agree to be responsible for certain risks, such as environmental risks, or might agree to be subject to certain non-performance-related default covenants, such as the maintenance of certain financial ratios related to its financial condition. In certain situations, a lessee might assume risks that are normally the responsibility of the legal owner of a property, such as risks associated with environmental contamination that occurred prior to the inception of the lease. The remedies under those risk provisions might include the right of the lessor to put the property to the lessee or the requirement that the lessee make a payment to the lessor. Paragraph 7 of Statement 13 requires that a lessee classify a lease as either an operating lease or a capital lease at lease inception based on certain criteria. However, Statement Copyright © 2010, Financial Accounting Standards Board Not for redistribution Page 113 does not specifically address how environmental risks and non-performance-related default covenants and the related remedies should be considered in the determination o

Topics: In some lease arrangements
Year: 2003
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