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Capital lease asset journal entry,longest loan on used car,auto future value calculator - Plans Download

Author: admin | Category: Loan For Car | Date: 11.02.2014

Recently, Capital Lease Group (CLG) announced that we have been working on developing a new asset management system to streamline the billing process for our customers. The changes to our asset management system are designed to improve our customers’ overall experience and make accounting easier with regard to their leased equipment and vehicles. Working with our Fleet Administrative contacts and their accounting departments, over the past few years, we have accumulated recommendations that focus on specific vehicle information – information that will be useful in identifying, tracking, and reordering vehicles for customers’ fleets.
On individual invoices that take place during the month, the new program will allow for better understood and consistent descriptions.
Below please see some examples of the way new invoices will look under the new asset management system. Capital Lease Group is a leading fleet leasing and fleet management provider in Massachusetts and beyond.
This is a Fleet Management Program with National capabilities, which is handled externally by our ASE certified Fleet Management partner – “Network”. Another point that helps them stand out from their competition is who’s answering the phone.  They have a call center that has won awards (Blue Seal Award) and is manned by ASE Certified Technicians who have received the same certifications that the vendors who’d be calling for approval have received. Capital Lease Group is proud to be a sponsor of the 2015 BAMSI Family Fun Day & Awareness Walk.
This is a€?Operating Leases versus Capital Leasesa€?, section 15.2 from the book Accounting in the Finance World (v.
This content was accessible as of December 29, 2012, and it was downloaded then by Andy Schmitz in an effort to preserve the availability of this book.
PDF copies of this book were generated using Prince, a great tool for making PDFs out of HTML and CSS. For more information on the source of this book, or why it is available for free, please see the project's home page. helps people like you help teachers fund their classroom projects, from art supplies to books to calculators. Account for an operating lease, realizing that the only liability to be reported are amounts that are currently due. Understand that the only asset reported in connection with an operating lease is prepaid rent if payments are made in advance.
Record the initial entry for a capital lease with both the asset and the liability calculated at the present value of the future cash flows. Explain the interest rate to be used by the lessee in determining the present value of a capital lease and the amount of interest expense to be recognized each period. Question: The Abilene Company has agreed to pay $100,000 per year for seven years to lease an airplane. Because the first payment has been made, no liability is reported on Abilenea€™s balance sheet although the contract specifies that an additional $600,000 in payments will be required over the subsequent six years.
During Year Two, the future value provided by the first prepayment gradually becomes a past value because of the passage of time. Question: One slight change can move this contract from an operating lease to a capital lease. Before the lessee starts computing the present value of the future cash flows, one issue must be resolved: the appropriate rate of interest to be applied. Present value of an annuity due of $1 per year for seven years at a 10 percent annual interest rate is $5.35526.
Once present value has been determined, the recording of the capital lease can proceed very much like a purchase made by signing a long-term liability.
A comparison at this point between the reporting of an operating lease and a capital lease is striking.

Question: In a capital lease, the property is not bought but is accounted for as if it had been purchased.
Answer: As with any purchase of an asset having a finite life where payments extend into the future, the cost of the asset is depreciated and interest is recognized in connection with the liability.
We are pleased to announce that we will begin rolling out the new asset management system beginning this month. And these customer recommendations will be reflected in the changes and enhancements to our new billing system.
At Capital Lease Group, we are always looking for ways that we can help improve the experience of our customers and help them focus on their core business functions.
Please feel free to contact Capital Lease Group with any questions or to learn more about the new system. We are committed to structuring a lease that will be designed to fit your business rather than having your business conform to the confines of a standard lease.
This is an un-bundled “pay-as-you-go” program which bills incurred maintenance charges monthly to the end user.  There is a small monthly fee per vehicle which varies according to fleet size. Capital Lease Group has positioned itself, through partnership with “Network”, as a Maintenance Management tool that will allow your company to realize savings, vehicle history and control over your fleet’s maintenance expenditures. See the license for more details, but that basically means you can share this book as long as you credit the author (but see below), don't make money from it, and do make it available to everyone else under the same terms. However, the publisher has asked for the customary Creative Commons attribution to the original publisher, authors, title, and book URI to be removed. Assume that legal title will not be exchanged and no purchase option is mentioned in the contract. In addition, the airplane itself is not shown as an asset by the lessee because this operating lease is viewed as the equivalent of a rent and not a purchase.
Assume all the information remains the same in the above example except that the airplane has an expected life of only nine years rather than ten. Abilene has agreed to pay $100,000 per year for seven years but no part of this amount is specifically identified as interest. In the previous chapter, a negotiated rate was established by the buyer and seller of a bond prior to its issuance. Abilene records both the leased airplane and the liability at the present value of the required cash payments. GAAP, if a lease arrangement meets any one of four criteria, the transaction is reported as a capital lease.
Therefore, the only reported asset is a prepaid rent and the liability is the current amount due.
Customers will start seeing changes to their monthly billing statements beginning on June 16, 2013. It is our aim that our new asset management system will help simplify and streamline leasing and accounting processes for them,” said Al Lawrence, President of Capital Lease Group, about the company’s new asset management system. There are more new developments to be announced in next month’s newsletter … please, stay tuned!
We will invest the time to understand each customer’s individual needs while offering a full range of leasing services and products that will complement each customer’s goals. What they truly bring to the table are savings, information and most importantly control.  They are responsible for the overall maintenance of approximately 140,000 commercial vehicles. You may also download a PDF copy of this book (20 MB) or just this chapter (1 MB), suitable for printing or most e-readers, or a .zip file containing this book's HTML files (for use in a web browser offline).
Further assume that the life of the plane is judged to be ten years and that the amount to be paid does not approximate the fair value of the item.

With that alteration, the life of the lease is 77.8 percent of the life of the asset (seven years out of nine years). As always, the present value calculation computes the interest at the appropriate rate and then removes it to leave the principal: the amount paid for the airplane.
For the lessee, good reasons exist for seeking an operating lease rather than a capital lease. What reporting takes place subsequent to the initial recording of a capital lease transaction? The recorded cost of the asset is depreciated over this period to match the expense recognition with the revenue that the airplane helps generate.
Companies often design transactions to either avoid or meet these criteria based on the desired method of accounting.
In contrast, for a capital lease, the present value of the future cash payments is determined using the incremental borrowing rate of the lessee. Our experienced staff of knowledgeable experts in sales, administration, and service will help you feel comfortable so that your main focus will be on your company’s vision while we handle all of your fleet requirements. The contract is signed on December 31, Year One, with the first annual payment made immediately. GAAP, if a reasonable rate of interest is not explicitly paid each period, a present value computation is required to divide the contractual payments between principal (the amount paid for the airplane) and interest (the amount paid to extend payment over this seven-year period). The annual interest rate used in determining the present value was 10 percent so interest expense of $43,553 (rounded) is recognized for this period of timea€”the principal of $435,526 times this 10 percent annual rate. Do IFRS requirements utilize the same set of criteria to determine whether a capital lease or an operating lease has been created? This handling is appropriate for an actual purchase when payments are made over time but also for a capital lease.
That is the interest rate the lessee would be forced to pay if this same amount of money was borrowed from a bank or other lending institution.As explained in upper-level accounting textbooks and courses, under certain circumstances, the lessee might use the implicit interest rate built into the lease contract by the lessor. As in Chapter 14 "In a Set of Financial Statements, What Information Is Conveyed about Noncurrent Liabilities Such as Bonds?", the effective rate method is applied here. The asset is then depreciated over the time that the lessee will make use of it while interest expense is recorded (along with periodic payments) in connection with the liability. Both the asset and liability are reported as if the asset had been bought for these payments. If the company had signed a loan to buy this airplane instead of lease it, the annual interest rate demanded by the lender is assumed to be 10 percent. However, under IFRS, the guidance focuses on the substance of the transaction and there are no quantitative breakpoints or bright lines to apply. For example, there is no definitive rule such as the a€?75 percent of the asseta€™s lifea€? criterion found in U.S. IFRS simply asks the question: have substantially all the risks and rewards of ownership been transferred? Therefore, this difference could be significant to those organizations that have designed their leases to fit into a certain category under U.S. More of these contacts will probably be accounted for as capital leases (which are referred to as finance leases in IFRS). This issue could be resolved in the near term, as FASB and IASB are conducting a joint project to modify their respective standards by 2011.

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