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In what circumstances is a capital lease better than an operational lease?
Wiki User
∙ 17y ago
You want to use a capitol lease on big items that are not going to be obsolete in a hort period of time. For instance if you owned a tow truck company a capitol lease would be ideal for the trucks. An operational lease would be good for the computer system, and office equipment you would need.
Wiki User
∙ 17y ago
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In what circumstances is a capital lease a better alternative to an operating lease and under what circumstances is a clapital lease a better alternative than buying an asset?
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
Which is better month to month tenancy or a lease?
It depends on your circumstances
What is an operational lease?
An operational lease is a type of lease in which the contract period is less than the actual life span of the leased equipment, and the lessor pays all serving and maintenance cost. There is no transfer of ownership.
What is lease obligation?
it is lease paid on capital invested
Capital lease and financing lease are the same thing?
Finance lease and operating lease are different things.
What is capitalized lease obligations?
it is lease paid on capital invested
When is a capital lease a better alternative than an operating lease?
It depends on your business needs. A capital lease allows you to carry an item on your books as if you own it, so any of the reasons for ownership would qualify. One good reason for opting for a capital lease is that at the end of the term, you may purchase the item for little more than what you've already invested. This is good, if the equipment is well-maintained and could last well beyond its useful life. I have to qualify the answer, though, because I am not sure if you are talking FAS13 definition of capital lease for financial reporting purposes or what some people call capital lease under the Internal Revenue Code (also known as conditional sale).
A lease of an asset for its entire productive life?
Lease which is done for the entire productive life of an asset is called "Capital lease or finance lease".
How can an accountant determine whether a lease is a capital lease or operating lease?
If a copy of the lease agreement is made available to the accountant, this should be easily determined.
What is the Difference between sales type lease and capital lease?
Capital lease is that lease in which assets are acquired for substantial useful life of asset for use in business. Sale type lease is that in which discounted cash flow for miminum lease payment is higher than value of leased asset and only relevant to lessor.
Can lease be broken when you have a change in income?
It depends on the text of the lease, but probably not. You're probably stuck with the same lease buy out provisions as you would under any other circumstances. Read your lease.
How do you account for a capital lease on a cash flow statement?
capital lease is part of cash flow from investing activities and payment in this regard is shown in this section of statement.
