USA Converting Financing lease to operating lease


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I was hoping to get some help in a unique situation. We acquired an asset with a capital lease in 2018 with the intention to purchase the asset at the end of the lease term. We have recorded the necessary liabilities for a financing lease as well as recorded the fixed asset along with depreciation. We have made the decision that we will not be purchasing the asset at the end of the term in 2024. This would make this an operating lease. How does one convert the financing lease to an operating? What happens to accumulated depreciation? Does this happen retrospectively?
 
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kirby

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We have made the decision that we will not be purchasing the asset at the end of the term in 2024. This would make this an operating lease.
No.
Look at the decision tree for determining an operating lease from a finance lease.
There is no test that says" What is your mood about purchasing the asset? "
So technically, you cannot switch unless, for example, the lease is modified.
Pragmatically, switching depends on whether your auditors accept your view for some reason.
 
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