The Commercial Allocation of the Lease of Goods

A lease qualifies as either an operating lease or a financing lease.

 

Obligations to pay taxes, insurance or maintenance may be assumed by either party and contracts may be noncancellable or cancellable with demands to pay additional penalties or incurrance of lease obligations.

 

Termination may also result in the right to purchase the leased aset at the Fair Market Value or renewal of lease terms at a nominal price.

 

Das Operating Leasing - Non capitalization Method

This type of lease has a shorter period of use and can not opt out of the contract once it is agreed upon. This lease type is treated as a rental contract.

 

Das Financial Leasing - Capitalization Method

This type of lease has a very long period of use when thinking of the total lifespan of the asset. For this reason the risks are largely transferred to the lessor because there is also a contract to sign which binds the lessor to make lease payments.

 

Das Vollamortisationsleasing

The full amount of the asset´s cost will be amortized if the total minimum lease payments approximate 90% the assets economic or fair value. Also if the lease duration covers 75% of the assets useful life. Lastly, is it likely that the lessor will obtain the asset at the end of the lease term?

 

• 75% economic useful life
• 90% Present Value of Lease Payments =Assets FMV

         +/=

        Minimum Lease Payments

• Bargain Purchase Option
• Substantial Penalties upon default or termination

        - /=

       Executory Costs

Discount Rate

This is the rate the lessee uses when calculating the minimum lease payments. It is the firms incremental borrowing rate. Eg. Given the same amount of down payment or assets used as collatoral, what rate would have been provided to borrow similar funds. If the implicit rate is known, the borrower or lessee must use that rate.  This is the rate the lessor uses to discount the assets minimum lease payments and unguranteed residual to the assets current FMV.

 

Depreciation Method (inline with income measurement)

• straight line
• sum of years digits
• declining balance
• units of production

 

 

 

 

Das Teilamortisationsleasing