$TSLAQ Since I am having a Tesla Accounting Frye Festival, here is one account that I can provide some reconcilement from the Q2 Earnings notes. Sales Type Leasing. I could not find the unit splits in their notes, but @evebitdap did provide them in a post. (1/13)
The governing code is ASC 842. Again, everything in financial accounting devolves into a journal entry from ASC code. ASC 842 is the new leasing code adopted on January 1, 2019. The one sentence version is: if it behaves like a sale from a manufacture but was leased. (2/13)
This is not specifically limited to Auto OEM. Dell actively uses this treatment for the leasing of computer equipment. Dealers who provide their own lease financing for used inventory are another example. (3/13)
Journal Entries:
Sale:
Lease Receivable
Cost of Good Sold
Sales Revenues
Inventory
Where: Lease receivable = PV of minimum lease payments + PV of residual; Which also equals the sales price. COGS = Unit costs - PV of residual. (4/13)
Sale:
Lease Receivable
Cost of Good Sold
Sales Revenues
Inventory
Where: Lease receivable = PV of minimum lease payments + PV of residual; Which also equals the sales price. COGS = Unit costs - PV of residual. (4/13)
At end of lease, the asset in brought back into inventory:
Inventory
Lease Receivable
If inventory FV doesn't equal the lease amount, an impairment is made for the difference. If residual significantly drops prior to lease end, an impairment is made. (5/13)
Inventory
Lease Receivable
If inventory FV doesn't equal the lease amount, an impairment is made for the difference. If residual significantly drops prior to lease end, an impairment is made. (5/13)
For an oddity beyond understanding, the depreciation costs are expensed to COGS for leasing. (page 43 of 2019 K.) (6/13)
Another oddity lies in resale value guarantees (Page 44 of the K). Leasing also takes into account third party resale value guarantees. Tesla originates a lease & sells the lease receivable only to a third party. The residual is guaranteed to the third party. (7/13)
Specifically: “The full price of the vehicle and the collateralized borrowing value is generally recorded within resale value guarantees and the customer upfront down payment is recorded within deferred revenue.” (Page 44 of K.) (8/13)
So, there are two additional numbers impacting Sales & COGS that are confounds. Keep this in mind. I am looking for gross variances with an unexplainable trendline. As in, will the deferred revenues from down payments & depreciation impact that much? (9/13)
The number with the greatest influence over revenues & gross profit at lease inception is the residual value. It is a present value calculation of the residual value at the end of the lease (PV of $1.) Management determines it. Larger = more gross profit. (10/13)
Attached are the last three quarters. The sheer number of units declining from their leasing program vs revenue recognized is the first clue. Taken down to the unit level is mystifying. Calculations at the bottom are estimates of the residual. (11/13) 
And here is the problem: You can double the implicit lease rates. Still makes no sense. Change my estimates for payments or down payments. Still makes no sense. (12/13)
If they are straight lining down payments, it should correlate to the outstanding leases. So here are the net leasing balances since 12/31/2018. Still makes no sense. Depreciation either. (13/13)
