Leasing Flashcards
1
Q
Capitol Lease
A
Considered an Asset; must book assets and liabilities associated
2
Q
Operating Lease
A
True Lease
3
Q
Capitol vs. Operating Lease Test
A
1) Ownership transferred
2) bargain purchase option
3) Lase term is greater/equal to 75% of the assets useful life
4)NET present value of lease payments is greater/equal to 90% of asset cost
ANY of the above = CAPITOL LEASE
4
Q
Sale and Leaseback
A
asset is sold but immediately lease back (i.e. home, rent it back)
5
Q
Lessor =
A
Owner of property
6
Q
Lessee =
A
User of property/item
7
Q
Full Service Lease =
A
Lessor pays all maintenance costs
8
Q
Net Lease =
A
Lessee pays maintenance
9
Q
Equity Finance
A
Partners contribute additional capitol
Plus = lowers interest cost
Minus= impacts partner case flow
