{[ promptMessage ]}

Bookmark it

{[ promptMessage ]}

IFM10 Ch19 Lecture - CHAPTER19 LeaseFinancing 1...

Info iconThis preview shows pages 1–8. Sign up to view the full content.

View Full Document Right Arrow Icon
  1 CHAPTER 19 Lease Financing
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon
  2 Topics in Chapter Types of leases Tax treatment of leases Effects on financial statements Lessee’s analysis Lessor’s analysis Other issues in lease analysis
Background image of page 2
  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.
Background image of page 3

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon
  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
Background image of page 4
  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  imputed interest payment is deductible. Why should the IRS be concerned  about lease provisions?
Background image of page 5

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon
  6 How does leasing affect a firm’s balance sheet? For accounting purposes, leases are  classified as either capital or operating. Capital leases must be shown directly  on the lessee’s balance sheet. Operating leases, sometimes referred to  as off-balance sheet financing, must be  disclosed in the footnotes. Why are these rules in place?
Background image of page 6
  7 What impact does leasing have  on a firm’s capital structure? Leasing is a substitute for debt. As such, leasing uses up a firm’s debt  capacity.
Background image of page 7

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon
Image of page 8
This is the end of the preview. Sign up to access the rest of the document.

{[ snackBarMessage ]}