The Financial Accounting Standards Board (FASB) on August, 17, 2010 released their "exposure draft" requiring companies to record nearly all leases on their balance sheets as a "right to use" asset, and a corresponding "future lease payment - liability". What does this mean to your business in layman terms? This proposal in essence does away with operating leases; all leases (unless immaterial) would be capitalized using the present value of the minimum lease payments. Therefore, businesses who in the past had off-balance sheet lease obligations, must now record these obligations on their balance sheet.
Another factor is what is the useful life of the equipment they are acquiring? If a company typically uses their equipment over a 3 year period and then upgrades to newer models, they probably would be better off leasing. For the last 10 years, 3 year lease rates have been very low and payments are very affordable compared to purchasing the equipment for cash or bank loan.
The impact of recording these lease obligations on the balance sheet can have multiple impacts, such as: businesses needing to alert their lenders as they will now be non-compliant with their loan covenants, negotiating new loan covenants with the lenders due to the restated financial statements, ratios used to evaluate a businesses potential of credit will be adversely impacted and the restatement of a lessee's financial statement once the change takes effect may result in a lower equity balance, and changes to various accounting ratios The conceptual basis for lease accounting would change from determining when "substantially all the benefits and risks of ownership" have been transferred, to recognizing "right to use" as an asset and apportioning assets (and obligations) between the lessee and the lessor.
A leased Vehicle/Car comes up for a Lease Takeover when someone has leased a vehicle/car, but is unable to continue paying the lease payments to the car leasing company. The biggest advantage of a Vehicle/Car Lease Takeover is the fact that you are taking over an existing lease and just have to get the Lease Transfer to your name. The individual forgoing the Lease has paid most of the initial down payments, monthly payments, and charges when leasing the vehicle/car, and you don't have to pay these fees again as it is not a fresh lease but a lease takeover.
To evaluate the cost to return the equipment (to a location that the leasing company will designate at the end of your lease term) you can guesstimate the costs by getting shipping quotes today based on the weight of the equipment that will be returned. The leasing company shifts this cost to you. With a paid off bank loan or cash purchase your new equipment vendor will likely take the old equipment away at no charge (because you own it). It is possible the old equipment could have some value, but from my copier experience, after 5 years it is minimal, if anything.
Whichever Vehicle or Car brand you may be looking for or thinking of buying, a Lease Takeover and Lease Transfer Company lists hundreds of Vehicles and Cars of many brands, makes, models, and years of usage. Whether it is a Ford, Chevrolet, Buick, Honda, etc of whatever make, model, and year, you will find your vehicle of choice, within your budget, at a Vehicle Lease Takeover and Transfer Company. If the Company does not have a Vehicle of your choice or within your budget, they will look for one and inform you as soon as they find the vehicle of your choice.
Another factor is what is the useful life of the equipment they are acquiring? If a company typically uses their equipment over a 3 year period and then upgrades to newer models, they probably would be better off leasing. For the last 10 years, 3 year lease rates have been very low and payments are very affordable compared to purchasing the equipment for cash or bank loan.
The impact of recording these lease obligations on the balance sheet can have multiple impacts, such as: businesses needing to alert their lenders as they will now be non-compliant with their loan covenants, negotiating new loan covenants with the lenders due to the restated financial statements, ratios used to evaluate a businesses potential of credit will be adversely impacted and the restatement of a lessee's financial statement once the change takes effect may result in a lower equity balance, and changes to various accounting ratios The conceptual basis for lease accounting would change from determining when "substantially all the benefits and risks of ownership" have been transferred, to recognizing "right to use" as an asset and apportioning assets (and obligations) between the lessee and the lessor.
A leased Vehicle/Car comes up for a Lease Takeover when someone has leased a vehicle/car, but is unable to continue paying the lease payments to the car leasing company. The biggest advantage of a Vehicle/Car Lease Takeover is the fact that you are taking over an existing lease and just have to get the Lease Transfer to your name. The individual forgoing the Lease has paid most of the initial down payments, monthly payments, and charges when leasing the vehicle/car, and you don't have to pay these fees again as it is not a fresh lease but a lease takeover.
To evaluate the cost to return the equipment (to a location that the leasing company will designate at the end of your lease term) you can guesstimate the costs by getting shipping quotes today based on the weight of the equipment that will be returned. The leasing company shifts this cost to you. With a paid off bank loan or cash purchase your new equipment vendor will likely take the old equipment away at no charge (because you own it). It is possible the old equipment could have some value, but from my copier experience, after 5 years it is minimal, if anything.
Whichever Vehicle or Car brand you may be looking for or thinking of buying, a Lease Takeover and Lease Transfer Company lists hundreds of Vehicles and Cars of many brands, makes, models, and years of usage. Whether it is a Ford, Chevrolet, Buick, Honda, etc of whatever make, model, and year, you will find your vehicle of choice, within your budget, at a Vehicle Lease Takeover and Transfer Company. If the Company does not have a Vehicle of your choice or within your budget, they will look for one and inform you as soon as they find the vehicle of your choice.
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Frank Miller has a Debt Consolidation Blog & Finance, these are some of the articles: Search Out Public Support For Emergencies And Pay Back Payday Loans Immediately You have full permission to reprint this article provided this box is kept unchanged.
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