136C Notes 2_15-2_22

136C Notes 2_15-2_22 - 136C Notes: 2/15/11 -About regrades...

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136C Notes: 2/15/11 ------------------------ About regrades for the last exam: Signed piece of paper with signature, reference to the answer key, recognize that grade can go down up as well as down Have until next Thursday, 2/24/2011, to turn in and submit for regrades. Add a sheet of paper to the bluebook and turn everything back in. Do not write in/on the bluebook. ------------------------ CHAPTER 21: Finishing up:: Land Leases: Capitalized only if they meet criteria 1 or 2. 1- you got the land at the end 2- you got the land at the end through a BPO …either way, you get the land at the end. Has to have a permanent nature to it. The lessor prefers capital leases to bring in more profits in the first year, recognized quicker. The lessee… Is there any way to get both guys what they want? Yes! There is! ::------>> Third party guarantees. The only way to get the lessor a capital lease and the lessee an operating lease. Instead of the lessee being the guarantor, we hire somebody else to be the guarantor. A third party. First thing to recognize: This guy is gonna want some money… so there is a cost involved here. This is the primary negative. But the positive is that the lessee has not guaranteed the residual value on the lease (the third party did). The lessor wants to capitalize, has he guaranteed? Yep. A third party guarantees it, they take on some risk for a price, but both guys get what they want and the deal will go through. This can really improve both sets of financial statements, which is desirable from both viewpoints. ***KNOW THIS FOR EXAM ESSAY. Sale and Leaseback (Show up in the Appendix) 1) *Use doesn't change, at least during the lease term. 2) *Financing tool. ::-->> Motel 6 Example >> 102% occupancy vs. 60% Figurehead Buy--> 1,000,000 #1: FMV Loan--> 1,000,000 BGT--> 300,000 1,000,000 >15% Loan Pmt 120,000 Basis 150,000 (Rent) 3) 1M --> Built --> 4 motels 4) Operating Lease 5) Gain- Not taxed.
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THERE IS NO LOSER. Get two people to help each other, everyone wins. This is how you become the treasurer. :) However, there is a special accounting rule for the gain… for accounting purposes. Only true accounting issue here that is really finance.
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This note was uploaded on 02/22/2012 for the course ACCT 1320 taught by Professor Staff during the Spring '11 term at Texas State.

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136C Notes 2_15-2_22 - 136C Notes: 2/15/11 -About regrades...

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