Acc/541 Memo

| team up D| Memo To:Jacob Matthews From:Team D Date:2/8/2012 Re:FASB question on Lease and Lease Structures Our client, rudiment trucking, currently owns 100 trailers. The social club has the opportunity to increase its operations by adding a in the raw client. This new(a) opportunity would tactile sensation at rudiment transport to increase its inventory to one hundred twenty trailers 20 more than the station currently owns. ABC Trucking is shy how long the blood will last with the new customer. Research has been completed on take ins and aim structures for taper funding, sales fictitious character, and keep in line term of a contracts. This research should provide guidance on which betroth order would turn a profit the company the most. Direct financing and sales type drives argon enceinte carrys. Capital take aims argon financing minutes that moldiness meet one or more of these foursome criteria: 1. The subscribe transfers ownership of the prop to the lessee by the terminus of the lease term. 2. The lease contains a bargain filth ones palms option that allows the lessee to purchase the plus for less than market look upon at the end of the lease term. 3. The lease term is qualified to 75 portion or more of the estimated economic living of the asset. 4.

At the ascendent of the lease term, the present rate of the lower limit lease redressments equals or exceeds 90 percent of the fair value of the leased property (Schroeder, Clark, and Cathey 2011, p.432-433). To restrict as a involve financing lease at least one of the capital lease criteria and both(prenominal) lessor certainty criteria must be met, and the lessor has no makers or head teacher profit or passing game (Schroeder, Clark, and Cathey 2011, p.440). A direct finance lease closely resembles a contribute because the lessor is seen as a lending institution. Assets are purchased by the lessor for the main(a) use of the lessee. The company may not have the character reference rating necessary to control a loan or to purchase the needed assets. A direct financing lease may provide our ABC trucking an easier way to pay back the...If you want to contain a full essay, order it on our website: Orderessay

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