Leasing Transactions

A lease is to be treated as either "Miete" or "Kaufvertrages".

 

The criteria used to decide which type of lease follows:

 

 

QUALIFIKATION DES LEASINGVERTRAGES

1.       Vertragsdauer im Verhältnis zur wirtschaftlichen Nutzungsdauer

 

2.       Kündigung Möglichkeiten

 

3.       Risikotragung bei zufälligem Untergang

 

4.       Höhe der Leasingraten

 

 

 

 

 

5.       Verwendbarkeit des Leasinggutes durch Dritte

 

6.       Kaufoption des Leasingnehmers sowie Höhe des Kaufpreises

 

7.       Mietverlängerungsoption des Leasingnehmers

 

8.       Gewinn- bzw Verlustverteilung bei Verkauf des Leasinggutes

 

9.       Andienungsrecht des Leasingebers

1.       Duration of contract in relation to the economic life

 

2.       Termination options

 

3.       assumption of risk for accidental loss

 

4.        The leasing rate

 

•        (75% Original Price = Lease Payments)

•        Security deposit = 50%

 

5.       Ability to lease the asset to third parties

 

6.       purchase option available to the lessee approximating the purchase price  

 

7.       Lessees option to extend the lease

 

 

8.       profit or loss distribution at the sale of the leased asset

 

9.       put option of the Lessor

 

The contract constitutes either a sale or rent of an asset. If the lease qualifies as a sale, then the lease should be capitalized. (Aktivierungspflicht)

 

Normally, a capitalized lease is subject to Investment Tax Credits (Investitionsbegünstigungen).

 

Furthermore, the balance sheet reflects both a current year and long term liability. This is not true if the lease qualifies as a rented object.