Capital Leases
A lease that is considered to possess the fundamental economic characteristic of asset ownership. A capital lease would be considered a purchased asset for accounting purposes for a company utilizing accrual...More
based accounting.
A lease that meets one of the following conditions is classified as a capital lease : the term of the lease is greater than 75% of the asset’s estimated economic life; the lease contains an option for the lessee to purchase the asset for less than its fair market value; ownership of the asset is transferred to the lessee at the end of the term of the lease: or the present value of the lease payments exceeds 90% of the fair market value of the asset.
As opposed to a capital lease, an operating lease would get the accounting treatment of a rental arrangement. Less
A lease that meets one of the following conditions is classified as a capital lease : the term of the lease is greater than 75% of the asset’s estimated economic life; the lease contains an option for the lessee to purchase the asset for less than its fair market value; ownership of the asset is transferred to the lessee at the end of the term of the lease: or the present value of the lease payments exceeds 90% of the fair market value of the asset.
As opposed to a capital lease, an operating lease would get the accounting treatment of a rental arrangement. Less
Recent Activity
John Kirk (Managing Director, Lease Portfolio Recovery Services)
Like-for-like return allows a lessee, instead of returning the precise piece of equipment with the serial number listed on the lease documents for a specific expiring lease, to return another piece of equipment – usually similar or almost identical to the piece of...
John Kirk (Managing Director, Lease Portfolio Recovery Services)
Leasing companies are typically highly profitable businesses, and most companies which lease the equipment – lessees – believe that they are getting a sweetheart deal. Both things can’t be true and the fact is that most lessees pay more for leased...
John Kirk (Managing Director, Lease Portfolio Recovery Services)
The fundamental myth is that end of lease (month-to-month and longer) extensions are in any way unusual. In fact most lessees struggle to return leased equipment and end up paying some version of extension rents on the majority of their equipment leases. Lessors...
John Kirk (Managing Director, Lease Portfolio Recovery Services)
One of the fun parts of negotiating leases is collecting the war stories. The negotiations often produce revealing and humorous moments. Coming from Boston, the biggest sporting events are Red Sox / Yankees baseball games, a Super Bowl which...
John Kirk (Managing Director, Lease Portfolio Recovery Services)
While it is true that IT and other assets experience such a steep reduction in value that repossession is less attractive to the lessor than other options in the case of client default, virtually all equipment leases contain numerous attractive options, and combinations...
John Kirk (Managing Director, Lease Portfolio Recovery Services)
One of the fun parts of negotiating leases is collecting the war stories. The negotiations often produce revealing and humorous moments. At times, as a part of an end of lease agreement, clients will agree to take some of the overall reduction in the...
John Kirk (Managing Director, Lease Portfolio Recovery Services)
One of the fun parts of negotiating leases is collecting the war stories. The negotiations often produce revealing and humorous moments. At times, as a part of an end of lease agreement, clients will agree to take some of the overall reduction in...
Anonymous (Accounting Manager)
John Kirk (Managing Director, Lease Portfolio Recovery Services)
One of the fun parts of negotiating leases is collecting the war stories. The negotiations often produce revealing and humorous moments. Lessors and lessees see lease transactions very differently. Lessees see leasing as finance transactions....
John Kirk (Managing Director, Lease Portfolio Recovery Services)
Not only is this myth both ubiquitous and wrong, it exposes a key difference in the way lessors and lessees understand the economics of leasing. Lessors count and plan on receiving some version of extension payments from most IT equipment lease transactions –...
