If any 1 of the 5 classification tests under the new lease rules is satisfied the Lessee must account for the lease contract as a Finance lease. If a lease contract must be accounted for as a Finance Lease under the New Rules by the Lessee, the lessor must account for the lease as a Sales Type lease In general, thanks to a practical expedient (see American Airlines) lease that were classified under the old (FAS13) rules as Operating leases are also classified as Operating leases by Lessees under the new rules. If a lessee classifies a lease under the New Rules as an Operating lease, then in likelihood the Lessor also classifies the lease as an Operating lease. Under the new rules, if an asset is customized and is useable only to a specific Lessee, have the Lease classification tests been satisfied sufficiently so that the Lessee must classify the lease as a Finance Lease ? Under the New Lease rules do we often observe a lease contract provision that transfers the title to the leased asset during the lease term? (This would mean the must classify it as a Finance Lease . ) Under an Operating Lease format under the new rules, does the Lessor report a Sale? Under the Finance Lease format under the new rules, does the lessor continue to depreciate the lease asset? Under the new lease rules should the Lease Liability be presented in two components: a current Liability and a Non-Current Liability? Must a short-term lease with a term equal to 1 year exactly be recognized "on balance sheet?"

# 1 2. GENERAL ISSUES -LEASE CLASSIFICATION TESTS YES/NO QUESTION - NEW LEASE ACCOUNTING RULES and OTHER TOPICS YES/NO If any 1 of the 5 cassification tests under the new lease rules is satisfied the Lessee must account for the lease contract as a Finance lease 2 a lease contract must be accounted for as a Finance Lease under the New Rules by the Lessee, the Lessor must account for the lease as a Sales Type lease. 3 In general, thanks to a practical expedient (see American Airlines) lease that were classified under the old (FAS13) rules as Operating leases are also classified as Operating leases by Lessees under the new rules. 4 If a Lessee classifies a lease under the New Rules as an Operating lease, then in likelihood the Lessor also classifies the lease as an Operating lease. 5 Under the new rules, if an asset is customized and is useable only to a specific Lessee, have the Lease classification tests been satisfied sufficiently so that the Lessee must classify the lease as a Finance Lease? 6 Under the New Lease rules do we often observe a lease contract provision that transfers the title to the leased asset during the lease term? (This would mean the Lessee must classify it as a Finance Lease) 7 Under an Operating Lease format under the new rules, does the Lessor report a Sale? Under the Finance Lease format under the new rules, does the Lessor continue to depreciate the lease asset? Under the new lease rules should the Lease Liability be presented in two components: a current Liability and a Non-Current Liability? 10 Must a short-term lease with a term equal to 1 year exactly be recognized "on balance sheet?" 8 9