[Verse 1] Under ASPE rules we classify each lease Two paths to choose, operating or finance piece Look at the criteria, four tests we apply Transfer of ownership when the term goes by Bargain purchase option at a discount rate Present value test at eighty-five or eight Economic life test, seventy-five percent These are the markers where our judgment's spent [Chorus] ASPE splits the lease in two Operating keeps it off the books for you Finance lease means capitalize Put the asset on your balance sheet to rise Different from IFRS sixteen's single way ASPE gives you choice in how you want to play Two models running side by side Let the four criteria be your guide [Verse 2] Operating lease is simple as can be Rent expense recorded monthly, that's the key No asset, no liability appears Just payments flowing through the fiscal years But finance lease tells a different story Asset and liability in all their glory Depreciate the asset, interest on the debt Split the payment, that's the method set [Chorus] ASPE splits the lease in two Operating keeps it off the books for you Finance lease means capitalize Put the asset on your balance sheet to rise Different from IFRS sixteen's single way ASPE gives you choice in how you want to play Two models running side by side Let the four criteria be your guide [Bridge] IFRS took a different road Right-of-use for every load Single model for all leases Complexity never ceases But ASPE keeps the old divide Bright line tests to help decide Private companies get relief From the recording that's more brief [Verse 3] Title transfer test is number one Ownership passes when the lease is done Bargain purchase option, test number two Below fair value, what would you do? Present value of the minimum pay If it's eighty-five percent, finance way Economic life, the seventy-five rule These four tests are your classification tool [Chorus] ASPE splits the lease in two Operating keeps it off the books for you Finance lease means capitalize Put the asset on your balance sheet to rise Different from IFRS sixteen's single way ASPE gives you choice in how you want to play Two models running side by side Let the four criteria be your guide [Outro] When you see a lease agreement Test the four for your treatment ASPE gives you dual approach Let the criteria be your coach
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