Cost is the next consideration. Although an outright cash purchase is usually the lowest total cost of ownership, the biggest question at the time of making the equipment acquisition is -- Do I have the disposable cash at this moment, and is this the best use of that cash? Most businesses can earn a higher return on investment within their business than the lease's or bank loan's interest cost. If they have to choose between generating more revenue and paying cash for equipment, most businesses will choose generating more revenue.
A key point to consider with regards to the proposed lease accounting changes is that, in all likelihood, existing operating leases, signed prior to the implementation of the new rules, will require reclassification as capital leases that must be accounted for on the balance sheet. This means that real estate professionals must immediately consider the effect that existing and planned leases will have on financial statements once the proposed rules are implemented. Since operating lease obligations can represent a larger liability than all balance sheet assets combined, lease reclassification can significantly alter the businesses balance sheet.
Lease Takeover and Lease Transfer Companies assist an individual to exit a Lease early by marketing the vehicle/car to lease buyers seeking a short-term lease transfer. Lease buyers can takeover a lease that fits their payment budget as well as select a lease term that fulfills their requirements.
A leased Vehicle/Car comes up for a Lease Takeover when someone has leased a vehicle/car, but is unable to continue paying the lease payments to the car leasing company. The biggest advantage of a Vehicle/Car Lease Takeover is the fact that you are taking over an existing lease and just have to get the Lease Transfer to your name. The individual forgoing the Lease has paid most of the initial down payments, monthly payments, and charges when leasing the vehicle/car, and you don't have to pay these fees again as it is not a fresh lease but a lease takeover.
To evaluate the cost to return the equipment (to a location that the leasing company will designate at the end of your lease term) you can guesstimate the costs by getting shipping quotes today based on the weight of the equipment that will be returned. The leasing company shifts this cost to you. With a paid off bank loan or cash purchase your new equipment vendor will likely take the old equipment away at no charge (because you own it). It is possible the old equipment could have some value, but from my copier experience, after 5 years it is minimal, if anything.
The FASB will accept public comments on this proposed change through December 15, 2010. If FASB makes a final decision in 2011 regarding this proposed change to lease accounting, the new rules will go into effect in 2013. Additionally, the staff of the Securities and Exchange Commission reported in a report mandated under Sarbanes-Oxley, that the amount of operating leases which are kept off the balance sheet is estimated at $1.25 trillion that would be transferred to corporate balance sheets if this proposed accounting change is adopted.
A key point to consider with regards to the proposed lease accounting changes is that, in all likelihood, existing operating leases, signed prior to the implementation of the new rules, will require reclassification as capital leases that must be accounted for on the balance sheet. This means that real estate professionals must immediately consider the effect that existing and planned leases will have on financial statements once the proposed rules are implemented. Since operating lease obligations can represent a larger liability than all balance sheet assets combined, lease reclassification can significantly alter the businesses balance sheet.
Lease Takeover and Lease Transfer Companies assist an individual to exit a Lease early by marketing the vehicle/car to lease buyers seeking a short-term lease transfer. Lease buyers can takeover a lease that fits their payment budget as well as select a lease term that fulfills their requirements.
A leased Vehicle/Car comes up for a Lease Takeover when someone has leased a vehicle/car, but is unable to continue paying the lease payments to the car leasing company. The biggest advantage of a Vehicle/Car Lease Takeover is the fact that you are taking over an existing lease and just have to get the Lease Transfer to your name. The individual forgoing the Lease has paid most of the initial down payments, monthly payments, and charges when leasing the vehicle/car, and you don't have to pay these fees again as it is not a fresh lease but a lease takeover.
To evaluate the cost to return the equipment (to a location that the leasing company will designate at the end of your lease term) you can guesstimate the costs by getting shipping quotes today based on the weight of the equipment that will be returned. The leasing company shifts this cost to you. With a paid off bank loan or cash purchase your new equipment vendor will likely take the old equipment away at no charge (because you own it). It is possible the old equipment could have some value, but from my copier experience, after 5 years it is minimal, if anything.
The FASB will accept public comments on this proposed change through December 15, 2010. If FASB makes a final decision in 2011 regarding this proposed change to lease accounting, the new rules will go into effect in 2013. Additionally, the staff of the Securities and Exchange Commission reported in a report mandated under Sarbanes-Oxley, that the amount of operating leases which are kept off the balance sheet is estimated at $1.25 trillion that would be transferred to corporate balance sheets if this proposed accounting change is adopted.
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Frank Miller has a Debt Consolidation Blog & Finance, these are some of the articles: What Are The Advantages Of A Place Becoming A Tax Haven You have full permission to reprint this article provided this box is kept unchanged.
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