Truck Short Term Lease Case

Therefore in this agreement the equipment is going to be partially financed by the lessor (Northwest) through a third-party financial institution (Lender) and act as a leveraged lease, wherein the lending company holds the title to the leased asset, while the lessor creates the agreement with the lessee (BNRR) and collects the payment for the use of the equipment. Therefore the lease in this case will be regarded as a financial decision for BNRR

Needspace entered a operating lease with WeHaveIt for 10-Year Lease term.Lease agreements have certain provisions depending on how the contract is written by the lessor to the lessee and what type of lease agreement. In this lease agreement we are focusing operating lease with provisions of NeedSpace and WeHaveIt, which has a 10 year lease term, no options to renew or negotiate renewal offered in the contract and the lessee incurs certain cost, repairs and maintenance. In regards to ASC 840 leases, according to 840-10-20 and 840-10-05-9A, 840-10-05-9B an operating lease is when the lessor the owner of the property gives the lessee the right to use property, plant or equipment for a limited amount of time. Meaning the lessee

Section 1, titled terms lists the terms of the contract. The terms of the agreement must be definite and certain. All material terms must be included. The material terms allow a court to determine what the damages are in the event that one of the parties breach the terms of the contract. Section 1, of Exhibit D: Commercial Lease Agreement list the date the lease starts and the date the lease ends. It then lists the damages that the tenant may take if the landlord is not able to provide the leased premises in a timely manner. The section then goes on to state the terms of the renewal process. The process of renewing the lease is set with a written notice of 90 days. This process is definite and certain. The renewal provision then states that the terms shall be at the rental listed in the below sections of the agreement and upon the same covenants, conditions and provisions as contained in the lease agreement. Both the terms listed to lease the premises and to renew the contract is definite and certain and it lists the material terms.

The lease provision that requires the lessee to remove the capitalized leasehold improvements at the end of the lease term does create legal obligation and that should be within the scope of asset retirement obligation.

(c) The term of the lease is equal to 75% or more of the estimated economic life of the leased asset.

Then thirdly, the operating lease is when the lessor depreciates the leased asset according to its depreciation policy. The maintenance costs of the leased asset are charged as an expense, the costs, such as finder’s fees and credit checks, are amortized over the lease term, and the leased equipment and accumulated depreciation are shown as equipment leased to others. Usually any lease that do not fall under the criteria for a direct financing lease or sales-type lease are recorded as an operating lease.

A statement of the terms of the lease to the property must be present. Id. In these facts, YTNH and Mr. Massey agreed to five years of rental with the first year at a rate of four dollars per square foot, and the years thereafter, at an annual rental rate that would automatically change in accordance with the Consumer Price Index for the South Urban region.

The determination of whether an arrangement is or contains a lease is based on the substance of the arrangement and requires an assessment of whether the fulfilment of the arrangement is dependent on the use of a specific asset or assets and whether the arrangement

the lessee is bound to renew the lease for the remaining economic life of the goods or is bound to become the owner of the goods;

At the lease commencement, finance leases are capitalised at the fair value of the leased property, otherwise the present value of the minimum lease payments if lower (MHI, 2014). Other short term and long term payables include the relevant rental obligations and net of finance charges (MHI, 2014). Every lease payment is apportioned between the liability and finance charges (MHI, 2014). The finance cost is indicated in the comprehensive income statement for the lease period as well as to generate a constant periodic rate of interest on the remaining balance of the liability for each period (MHI, 2014). During the lease term, the depreciation is considered for the useful life of the asset such as the property, plant and equipment assigned under finance leases (MHI, 2014). The portion of the risks and rewards of ownership are persevered by the lessor are categorized as operating leases for leases (MHI, 2014). For the period of the lease, all payments made under operating leases less any incentives from lessor are indicated in the comprehensive income statement on a straight-line basis (MHI,

upfront payment to lease the parcel of land for the expected 20-year life of the project.

Although many variations of lease financing are available, potential lessees should be familiar with two general types of leases: the full payout lease and the fair market value (FMV) lease. The choice of lease is based upon the lessees’ long-term plans for the asset involved. A full payout lease is one in which the present value of the payment stream equals the acquisition cost of the asset. Options at the end of the lease typically include return, renewal, or purchase often for $1. The lessee is able to deploy and utilize the equipment, while the periodic payments of the full payout lease ease the financial burden of making a large IT acquisition. This option is a good choice when future ownership is desired, the dollar value of the equipment is substantial, the expected productive life of the assets is longer than five years, and the flexibility of spreading out payments would

b. Any guarantee by the lessee (including by a third party related to the lessee) of the residual value at the expiration of the lease term, whether or not payment of the guarantee constitutes a purchase of the leased property. If the lessor has the right to require the lessee to purchase the property at termination of the lease for a certain or determinable amount, that amount shall be considered a lessee guarantee of the residual value. If the lessee agrees to make up any deficiency below a stated amount in the lessor 's realization of the residual value, the residual value guarantee to be included in the minimum lease payments shall be the stated amount, rather than an estimate of the deficiency to be made up.

The firm signed a long-term lease with PennState Leasing last year for trucks where one of these trucks will be available for use on the new project in month 1, two for month 2, three for month 3 and one for month 4. The long-term leasing

books and depreciated, and the lessee recognizes lease payments in the income statement in the period in which it is paid.