NASA Procedural Requirements

NPR 9260.1A Effective Date: February 09, 2015 Expiration Date: February 09, 2029

Subject: Liabilities (Revalidated with Change 2 April 19, 2023)

Responsible Office: Office of the Chief Financial Officer

Chapter 7 Capital Lease Liability

7.1 General

7.1.1 NASA will record and report capital lease liability in accordance with SFFAS No. 5 and SFFAS No. 6, Accounting for Property, Plant and Equipment, as amended, and OMB Circular No. A-136.

7.1.2 A lease should be classified as a capital lease if, at its inception, one or more of the following criteria are applicable:

a. The lease transfers ownership to NASA at the end of the term.

b. The lease contains an option to purchase the leased property at a bargain price.

c. The non-cancelable length of the lease is equal to or greater than 75 percent of the estimated economic life of the leased property.

d. The present value of rental and other minimum lease payments, excluding that portion of the payments representing executory cost, equals or exceeds 90 percent of the fair value of the leased property.

7.1.3 Criteria "c" and "d" of paragraph 7.1.2 are not applicable when the beginning of the lease term falls within the last 25 percent of the total estimated economic life of the leased property.

7.1.4 The amount to be recorded as a liability is the present value of the rental and other minimum lease payments during the term, excluding that portion of the payments representing executory cost or the fair value of the leased property, whichever is less.

7.2 Cross Reference to Current Policy

7.2.1 For additional information on accounting policies for capital leases, see ch. 6 of NPR 9250.1, Property, Plant, and Equipment and Operating Materials and Supplies.

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