6.6 Fees Paid by the Lessee to Owners of Special-Purpose Entities
ASC 842-10
30-5 At the commencement date, the lease payments shall consist of the following payments relating to the use of the underlying asset during the lease term: . . .
e. Fees paid by the lessee to the owners of a special-purpose entity for structuring the transaction. However, such fees shall not be included in the fair value of the underlying asset for purposes of applying paragraph 842-10-25-2(d). . . .
In the case of SPEs, lease payments should include any amounts paid by the
lessee to the owners of the SPE for structuring
the transaction. Although these fees are included
in the lease payments, the fees should be excluded
from the calculation of the fair value of the
underlying asset in the determination of the
appropriate lease classification under ASC
842-10-25-2(d).
Example 6-14
Lessor LLC (a VIE) holds a single real estate asset that it leases to Lessee.
The lease contains a residual value guarantee (see the next
section). Lessee accounts for the lease as an operating
lease. Further, Lessee has a variable interest in Lessor LLC
through the residual value guarantee.
Although Lessee has a variable interest, Lessor LLC is consolidated by REIT, which is the primary beneficiary of Lessor LLC. REIT is in the business of owning real estate and leasing it to tenants as a source of financing. Lessor LLC was created by REIT to own the specific underlying real estate. REIT charges Lessee certain fees as compensation for the initial setup costs of Lessor LLC.
The lease payments should include the fees charged to Lessee by REIT for structuring the transaction.