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it is lease paid on capital invested
When you book the capital lease, record the asset at its fair market value or the present value of minimum lease payments, whichever is less. The capital lease obligation is recorded at the same amount. Minimum lease payments include all rental payments required during the term of the lease plus any residual value guaranteed by the lessee. They also include any payment the lessee must make for not renewing or extending the lease, including a requirement to purchase the asset. They do not include any guarantee of the lessor's debt by the lessee, contingent rentals, or any penalty for which the term of the lease has been extended. They also do not include the portion of the rent payments which represent executory costs, such as insurance, taxes, and maintenance, and any related profit. The interest rate used to calculate the present value of the minimum lease payments is normally your incremental borrowing rate (the interest rate you would pay to borrow a similar amount of money for a similar length of time), unless you know the lessor's implicit interest rate for the lease and that is lower than your incremental borrowing rate. Sources: SFAS No. 13; RIA Checkpoint
Is called a lease.
When you book the capital lease, record the asset at its fair market value or the present value of minimum lease payments, whichever is less. The capital lease obligation is recorded at the same amount. Minimum lease payments include all rental payments required during the term of the lease plus any residual value guaranteed by the lessee. They also include any payment the lessee must make for not renewing or extending the lease, including a requirement to purchase the asset. They do not include any guarantee of the lessor's debt by the lessee, contingent rentals, or any penalty for which the term of the lease has been extended. They also do not include the portion of the rent payments which represent executory costs, such as insurance, taxes, and maintenance, and any related profit. Sources: SFAS No. 13; RIA Checkpoint
Finance lease and operating lease are different things.
Capitalized lease obligations refer to lease agreements where the lessee records the leased asset as a capital lease on their financial statements. This means the lessee treats the leased asset as if it were purchased with a loan, and includes the lease payments as both an asset and a liability on their balance sheet.
When you book the capital lease, record the asset at its fair market value or the present value of minimum lease payments, whichever is less. The capital lease obligation is recorded at the same amount. Minimum lease payments include all rental payments required during the term of the lease plus any residual value guaranteed by the lessee. They also include any payment the lessee must make for not renewing or extending the lease, including a requirement to purchase the asset. They do not include any guarantee of the lessor's debt by the lessee, contingent rentals, or any penalty for which the term of the lease has been extended. They also do not include the portion of the rent payments which represent executory costs, such as insurance, taxes, and maintenance, and any related profit. Sources: SFAS No. 13; RIA Checkpoint Capitalise the asset at net book value; i.e., state the asset at net book value in the balance sheet, charge the depreciation in the Income Statement.
Lease which is done for the entire productive life of an asset is called "Capital lease or finance lease".
As of July 2014, the market cap for Air Lease Corporation (AL) is $3,710,788,357.76.
If a copy of the lease agreement is made available to the accountant, this should be easily determined.
1) When you do not need a current tax deduction, a capital works better, you can take depreciation over the term of the lease. 2) You buy a appreciating asset and lease a depreciating asset, A capital lease is better with a depreciating asset. http://www.equipmentleasing101.com
The landlord has an obligation to try to rent it. If she cannot, she can sue you for each month, through the end of the lease.