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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

However, the provision in the lease agreement does not call upon the lessee to make deposits but simply requires the lessee to perform repair and maintenance on the leased premises.

According to "Minimum Lease Criterion" 840-10-25-4: "This guidance addresses what constitutes minimum-lease-payments under the minimum-lease-payments criterion in paragraph 840-10-25-1(d) from the perspective of the lessee and the lessor. Lease payments that depend on a factor directly related to the future use of the leased property, such as machine hours of use or sales volume during the lease term, are contingent rentals and, accordingly, are excluded from minimum lease payments in their entirety. (Example 6 [see paragraph 840-10-55-38] illustrates this guidance.) However, lease payments that depend on an existing index or rate, such as the consumer price index or the prime interest rate, shall be included in minimum lease payments based on the index or rate existing at lease inception; any increases or decreases in lease payments that result from subsequent changes in the index or rate are contingent rentals and thus affect the determination of income as accruable."

The third and final question from the case is how would the lease classification change under U.S. GAAP. The FASB codification that deals with leases is ASC 840. U.S. GAAP classifies leases as operating leases or capital leases and it has a section for sale-leaseback transactions as well. Under U.S. GAAP, the lease in this case would be classified as a capital lease. This is because ASC 840-10-25-29 says, “If at its inception a lease meets any of the four lease classification criteria in paragraph 840-10-25-1, the lease shall be classified by the lessee as a capital lease.” This lease meets two of those criterions. The lease term is equal to 75% of the economic life of the equipment (3 year lease term / 4 year economic life of equipment = .75 or 75%) and the present value of the minimum lease payments “equals or exceeds 90 percent of the excess of the fair value of the lease property to the lessor at lease inception over any related investment tax credit retained by the lessor and expected to be realized by the lessor” (ASC 840-10-25-1d). The present value of the minimum lease payments does in fact equal or exceed 90 percent of the fair value of the equipment ($248,690 / $265,000 = .94 or 94%). Under ASC 840-10-25-31, the lessee should use the implicit rate to calculate the present value of the lease payments because the lessee already

Miner agreed to rent unit #3 to Plaintiff, a former tenant of Portola complex. Plaintiff worked as a waitress at Danny’s restaurant and resided in unit #3 for one year before her lease expired on December 31, 2016. Although Plaintiff regularly paid rent in a timely fashion, during her tenancy however, multiple noise complaints and damage sustained to the unit has subsequently lead to her renew lease denial on December 2, 2016. Moreover, Plaintiff never repaired the garbage disposal in her unit in accordance with her leasing agreement.

On December 31,2015, Ms. Miner agreed to rent unit #3 to Plaintiff, a former tenant of Portola complex (Exhibit 4). Plaintiff worked as a waitress at Danny’s restaurant and resided in unit #3 for one year before her lease expired on December 31, 2016. Although Plaintiff regularly paid rent in a timely fashion, during her tenancy, however, multiple noise complaints and damage sustained to the unit has subsequently lead to her renew lease denial on December 2, 2016. Moreover, Plaintiff never repaired the garbage disposal in her unit in accordance with her leasing agreement.

Research has been performed for your client to give informative information about leases and lease structures. Through this research there are three sub-types of leases from the standpoint of the lessor, which are direct financing leases, sales-type leases, and operating leases. The information found on the Financial Accounting Standards Board website pertaining to each type of lease will guide your client to making an appropriate decision regarding which type of lease will be beneficial to their company.

of certain leases. This would make a lot of sense to them financially and in the long run.

Lease agreements are usually part of the negotiations; sellers may sublease or prefer a new lease to be removed from liability.

3.2 Not with standing the provisions of 3.1 should the municipal rates and taxes, special sanitary fees and refuse removal fees or any other outgoings or charges payable in respect of the premises to the local or any other authority be increased from time to time so as to exceed the amounts payable therefore on the commencement date, the monthly rental payable by the LESSEE shall ipso facto be increased from time to time with effect from the date upon which such increases become effective by one- twelve of the amount thereof.

While there are more incentives to classifying a lease as operating such as tax incentives, higher return on asset, and better solvency ratios, the lease must be classified as a Capital Lease so as to stay in accordance with IFRS. However, a Capital Lease does provide a company with a higher operating cash flow, and reduces Net Income,

Items to be addressed: market price garage $ 6.5 mio (January 1, 2003) lease 10 years for annual payment of $ 1 mio (end year, start 2003) useful life 20 years, when major renovations are needed Ciclón marginal borrowing rate was 10% lease contract signed January 1, 2003

There is no guarantee that a lease will be renewed when it expires, and loss of interest accumulated on the down payment deposit that is paid when taking occupation

The accounting standard completely eliminates the difference between operating and capital lease. Lessee is supposed to record the right to use the asset and the lease payments that he has to make. Henry, E. and Holzmann, O.J., (2011) mentioned that the present value of lease payment is arrived at using the borrowing rate at which the lessee borrows or the rate the lessor

Broadly put, a lease agreement is a contract between two parties, the lessor and the lessee. The lessor is the legal owner of the asset; the lessee obtains the right to use the asset in return for regular rental payments. The lessee also agrees to abide by various conditions regarding their use of property or equipment. For example, a person leasing a car may agree that the car will be only used for personal use.