Chapter19 - CHAPTER 19 Lease Financing 1 Topics in Chapter...

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  1 CHAPTER 19 Lease Financing
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  2 Topics in Chapter Types of leases Tax treatment of leases Effects on financial statements Lessee’s analysis
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  3 Who are the two parties to  a lease transaction? The lessee, who uses the asset and  makes the lease, or rental, payments. The lessor, who owns the asset and  receives the rental payments. Note that the lease decision is a  financing decision for the lessee and an  investment decision for the lessor.
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  4 What are the five primary  lease types? Operating lease Short-term and normally cancelable Maintenance usually included Financial lease Long-term and normally noncancelable Maintenance usually not included Sale and leaseback Combination lease "Synthetic" lease
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  5 How are leases treated for tax  purposes? Leases are classified by the IRS as  either guideline or nonguideline. For a guideline lease, the entire lease  payment is deductible to the lessee. For a nonguideline lease, only the 
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Chapter19 - CHAPTER 19 Lease Financing 1 Topics in Chapter...

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