Dominion Lending Centres Clearlease Reports Leasing Equipment Still a Good Deal Despite Accounting Changes and National SBA Equipment Lease
VANCOUVER, BC (July 1, 2011) Dominion Lending Centres Clearlease Reports Companies leasing equipment, the change July 1, 2011 means that, for accounting purposes, all leases for plant, property and equipment would be recorded on the balance sheet for some time.
Manufacturers are facing some uncertainly about how the recent accounting changes for leased equipment and real estate will affect their bottom line. Last September, the Financial Accounting Standards Board (FASB) and International Accounting Standards Board (IASB) released the “Lease Accounting Exposure Draft,” which is a joint public statement about the intended changes to current FASB and IASB lease accounting guidance.
Although the proposed changes are significant and complicated, it is important to keep in mind that the majority of lease transactions completed by manufacturers today will not be impacted. In fact, industry experts estimate that fewer than 25% of equipment leases will be materially impacted by the proposed changes. Also, despite the forthcoming changes in accounting treatment, there is still significant upside to leasing manufacturing equipment.
Proposed Changes
For companies leasing equipment, the change means that, for accounting purposes, all leases for plant, property and equipment would be recorded on the balance sheet for some amount. The proposed changes would replace FAS 13 operating and capital lease treatment with a single method called “Right of Use” (ROU). The ROU method determines how much would go on the balance sheet.
This change will have the biggest impact on manufacturers currently using or considering an operating lease. Currently, FAS 13 says, among other things, that if the present value of payments due under the lease agreement is less than 90% of the original cost of the equipment, the lease should be treated as an operating lease. If the present value is more than 90%, the lease is a capital lease.
Commonly referred to as “off balance sheet” financing, an operating lease gives the business the right to use the equipment. At the end of the lease period, the business can typically purchase the equipment, renew the lease or return the equipment to the lessor; since the business does not assume the risk of ownership, it enjoys the accounting benefits of not owning equipment. Instead of carrying the asset and associated debt on its balance sheet, the business simply treats the lease payments as an operating expense on the income statement. This can be an attractive option for companies that watch their balance sheet and return ratios closely as a result of bank or bond-related financial covenants and investor or board oversight. The use of operating leases is always disclosed in the notes of the lessee’s audited financial statements.
The proposed changes would eliminate this “bright line” 90% test. Rather, the proposed ROU method would take several factors into consideration and calculate the value that would go on the balance sheet.
Right of Use Method
The ROU method determines the present value of the likely payments a manufacturer will make under a lease agreement, discounted using the manufacturer’s incremental borrowing rate, plus any initial direct costs incurred. Estimated lease payments would likely include initial term payments, interim rent, contingent rents, lessee residual guarantees, and, if historically exercised, optional renewal payments.
Dominion Lending Centres Clearlease Video Link: http://youtu.be/f_kk7WJa7Uk
For more information please visit us at: http://www.clearlease.com/Career-Opportunities.html
About Dominion Lending Centres Clearlease
Dominion Lending Centres Clearlease Commercial (DLC Clearlease/Clearlease.com) is a fully diversified Lease Finance Mortgage Banking Brokerage Company specializing in Equipment Leasing, Automobile Leasing, Residential, Commercial Lending/Mortgage Financing. DLC Clearlease possesses the capability to accommodate financing needs ranging from a small second Home Mortgage to a Multi-Million Dollar Commercial Projects. No mortgage is too small or too large for this integrated Company.
Equipment Lease Financing in Vancouver, Surrey, Delta, Richmond, Langley, New Westminster, North Vancouer, West Vancouver, B.C. Also offering Automobile Lease Financing and Mortgage information. Founded by the Pidgeon brothers Alexander Pidgeon and Rene Pidgeon.
You may have recently seen a Dominion Lending advertisement on such media outlets as: Global News, CTV News, CBC Television, Rogers Sportsnet or possibly heard the great Don Cherry, a Canadian Sports legend, discuss Dominion Lending Centres.
Contact DLC Clearlease.com:
Dominion Lending Centres Clearlease
HEAD OFFICE, Bentall Two, Suite 900, 555 Burrard Street, Vancouver, BC, V7X 1M8, CANADA.
Mr. Alexander Pidgeon, Editor in Chief
Tel: (604) 696-1221 ext. 199
eMail: [email protected]
Website: http://www.clearlease.com
News: http://clearlease.com/category/equipment-lease-blog/feed/rss
Twitter: @clearlease
###
Video Link: http://youtu.be/f_kk7WJa7Uk
VANCOUVER, BC (July 1, 2011) Dominion Lending Centres Clearlease Reports Companies leasing equipment, the change July 1, 2011 means that, for accounting purposes, all leases for plant, property and equipment would be recorded on the balance sheet for some time.
Manufacturers are facing some uncertainly about how the recent accounting changes for leased equipment and real estate will affect their bottom line. Last September, the Financial Accounting Standards Board (FASB) and International Accounting Standards Board (IASB) released the “Lease Accounting Exposure Draft,” which is a joint public statement about the intended changes to current FASB and IASB lease accounting guidance.
Although the proposed changes are significant and complicated, it is important to keep in mind that the majority of lease transactions completed by manufacturers today will not be impacted. In fact, industry experts estimate that fewer than 25% of equipment leases will be materially impacted by the proposed changes. Also, despite the forthcoming changes in accounting treatment, there is still significant upside to leasing manufacturing equipment.
Proposed Changes
For companies leasing equipment, the change means that, for accounting purposes, all leases for plant, property and equipment would be recorded on the balance sheet for some amount. The proposed changes would replace FAS 13 operating and capital lease treatment with a single method called “Right of Use” (ROU). The ROU method determines how much would go on the balance sheet.
This change will have the biggest impact on manufacturers currently using or considering an operating lease. Currently, FAS 13 says, among other things, that if the present value of payments due under the lease agreement is less than 90% of the original cost of the equipment, the lease should be treated as an operating lease. If the present value is more than 90%, the lease is a capital lease.
Commonly referred to as “off balance sheet” financing, an operating lease gives the business the right to use the equipment. At the end of the lease period, the business can typically purchase the equipment, renew the lease or return the equipment to the lessor; since the business does not assume the risk of ownership, it enjoys the accounting benefits of not owning equipment. Instead of carrying the asset and associated debt on its balance sheet, the business simply treats the lease payments as an operating expense on the income statement. This can be an attractive option for companies that watch their balance sheet and return ratios closely as a result of bank or bond-related financial covenants and investor or board oversight. The use of operating leases is always disclosed in the notes of the lessee’s audited financial statements.
The proposed changes would eliminate this “bright line” 90% test. Rather, the proposed ROU method would take several factors into consideration and calculate the value that would go on the balance sheet.
Right of Use Method
The ROU method determines the present value of the likely payments a manufacturer will make under a lease agreement, discounted using the manufacturer’s incremental borrowing rate, plus any initial direct costs incurred. Estimated lease payments would likely include initial term payments, interim rent, contingent rents, lessee residual guarantees, and, if historically exercised, optional renewal payments.
Dominion Lending Centres Clearlease Video Link: http://youtu.be/f_kk7WJa7Uk
For more information please visit us at: http://www.clearlease.com/Career-Opportunities.html
About Dominion Lending Centres Clearlease
Dominion Lending Centres Clearlease Commercial (DLC Clearlease/Clearlease.com) is a fully diversified Lease Finance Mortgage Banking Brokerage Company specializing in Equipment Leasing, Automobile Leasing, Residential, Commercial Lending/Mortgage Financing. DLC Clearlease possesses the capability to accommodate financing needs ranging from a small second Home Mortgage to a Multi-Million Dollar Commercial Projects. No mortgage is too small or too large for this integrated Company.
Equipment Lease Financing in Vancouver, Surrey, Delta, Richmond, Langley, New Westminster, North Vancouer, West Vancouver, B.C. Also offering Automobile Lease Financing and Mortgage information. Founded by the Pidgeon brothers Alexander Pidgeon and Rene Pidgeon.
You may have recently seen a Dominion Lending advertisement on such media outlets as: Global News, CTV News, CBC Television, Rogers Sportsnet or possibly heard the great Don Cherry, a Canadian Sports legend, discuss Dominion Lending Centres.
Contact DLC Clearlease.com:
Dominion Lending Centres Clearlease
HEAD OFFICE, Bentall Two, Suite 900, 555 Burrard Street, Vancouver, BC, V7X 1M8, CANADA.
Mr. Alexander Pidgeon, Editor in Chief
Tel: (604) 696-1221 ext. 199
eMail: [email protected]
Website: http://www.clearlease.com
News: http://clearlease.com/category/equipment-lease-blog/feed/rss
Twitter: @clearlease
###
Video Link: http://youtu.be/f_kk7WJa7Uk
Dominion Lending Centres Clearlease Reports Leasing Equipment Still a Good Deal Despite Accounting Changes and National SBA Equipment Lease
VANCOUVER, BC (July 1, 2011) Dominion Lending Centres Clearlease Reports Companies leasing equipment, the change July 1, 2011 means that, for accounting purposes, all leases for plant, property and equipment would be recorded on the balance sheet for some time.
Manufacturers are facing some uncertainly about how the recent accounting changes for leased equipment and real estate will affect their bottom line. Last September, the Financial Accounting Standards Board (FASB) and International Accounting Standards Board (IASB) released the “Lease Accounting Exposure Draft,” which is a joint public statement about the intended changes to current FASB and IASB lease accounting guidance.
Although the proposed changes are significant and complicated, it is important to keep in mind that the majority of lease transactions completed by manufacturers today will not be impacted. In fact, industry experts estimate that fewer than 25% of equipment leases will be materially impacted by the proposed changes. Also, despite the forthcoming changes in accounting treatment, there is still significant upside to leasing manufacturing equipment.
Proposed Changes
For companies leasing equipment, the change means that, for accounting purposes, all leases for plant, property and equipment would be recorded on the balance sheet for some amount. The proposed changes would replace FAS 13 operating and capital lease treatment with a single method called “Right of Use” (ROU). The ROU method determines how much would go on the balance sheet.
This change will have the biggest impact on manufacturers currently using or considering an operating lease. Currently, FAS 13 says, among other things, that if the present value of payments due under the lease agreement is less than 90% of the original cost of the equipment, the lease should be treated as an operating lease. If the present value is more than 90%, the lease is a capital lease.
Commonly referred to as “off balance sheet” financing, an operating lease gives the business the right to use the equipment. At the end of the lease period, the business can typically purchase the equipment, renew the lease or return the equipment to the lessor; since the business does not assume the risk of ownership, it enjoys the accounting benefits of not owning equipment. Instead of carrying the asset and associated debt on its balance sheet, the business simply treats the lease payments as an operating expense on the income statement. This can be an attractive option for companies that watch their balance sheet and return ratios closely as a result of bank or bond-related financial covenants and investor or board oversight. The use of operating leases is always disclosed in the notes of the lessee’s audited financial statements.
The proposed changes would eliminate this “bright line” 90% test. Rather, the proposed ROU method would take several factors into consideration and calculate the value that would go on the balance sheet.
Right of Use Method
The ROU method determines the present value of the likely payments a manufacturer will make under a lease agreement, discounted using the manufacturer’s incremental borrowing rate, plus any initial direct costs incurred. Estimated lease payments would likely include initial term payments, interim rent, contingent rents, lessee residual guarantees, and, if historically exercised, optional renewal payments.
Dominion Lending Centres Clearlease Video Link: http://youtu.be/f_kk7WJa7Uk
For more information please visit us at: http://www.clearlease.com/Career-Opportunities.html
About Dominion Lending Centres Clearlease
Dominion Lending Centres Clearlease Commercial (DLC Clearlease/Clearlease.com) is a fully diversified Lease Finance Mortgage Banking Brokerage Company specializing in Equipment Leasing, Automobile Leasing, Residential, Commercial Lending/Mortgage Financing. DLC Clearlease possesses the capability to accommodate financing needs ranging from a small second Home Mortgage to a Multi-Million Dollar Commercial Projects. No mortgage is too small or too large for this integrated Company.
Equipment Lease Financing in Vancouver, Surrey, Delta, Richmond, Langley, New Westminster, North Vancouer, West Vancouver, B.C. Also offering Automobile Lease Financing and Mortgage information. Founded by the Pidgeon brothers Alexander Pidgeon and Rene Pidgeon.
You may have recently seen a Dominion Lending advertisement on such media outlets as: Global News, CTV News, CBC Television, Rogers Sportsnet or possibly heard the great Don Cherry, a Canadian Sports legend, discuss Dominion Lending Centres.
Contact DLC Clearlease.com:
Dominion Lending Centres Clearlease
HEAD OFFICE, Bentall Two, Suite 900, 555 Burrard Street, Vancouver, BC, V7X 1M8, CANADA.
Mr. Alexander Pidgeon, Editor in Chief
Tel: (604) 696-1221 ext. 199
eMail: [email protected]
Website: http://www.clearlease.com
News: http://clearlease.com/category/equipment-lease-blog/feed/rss
Twitter: @clearlease
###
Video Link: http://youtu.be/f_kk7WJa7Uk