The Financial Accounting Standards Board (FASB) on August, 17, 2010 released their „exposure draft“ requiring companies to record nearly all leases on their balance sheets as a „right to use“ asset, and a corresponding „future lease payment – liability“. What does this mean to your business in layman terms? This proposal in essence does away with operating leases; all leases (unless immaterial) would be capitalized using the present value of the minimum lease payments. Therefore, businesses who in the past had off-balance sheet lease obligations, must now record these obligations on their balance sheet.

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.

If you are typically holding equipment for 5 years or longer, paying cash or even a bank loan may be a better choice from a total cost of ownership perspective. You simply multiple the lease payments times the lease term (in months), plus the lease residual (buyout), plus the equipment return cost and compare that to the sum of the payments for a bank loan to determine the lowest total cost of ownership.

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.

But you do have to be aware of and enquire thoroughly with the Lease Takeover Company regarding the costs of a Lease Takeover and the type of lease. You can also get many offers and incentives from the individual trying to get out of a lease. The Company will guide you on all procedures and paperwork involved in a Lease Transfer and getting the Car Lease transferred to your name. Almost all Lease Takeover and Lease Transfer Companies have websites where you can register and browse online for Vehicle/Cars in the listings for lease takeovers.

Make it a condition of earning the sale that the equipment vendor you are acquiring your new equipment from will help you return the old equipment (if leased). Ask the new equipment vendor to get 3 return shipping quotes (for the old equipment being returned) and make sure you have the right to see them and select the return shipping quote that best meets your needs. Always insure the equipment being returned (the leasing company will typically list a value in their „Return Authorization letter) so any damage can be the shipping carrier’s problem and not yours. It is also a great idea to take digital pictures of the equipment just before it leaves your office. This way you can prove any damage to the equipment occurred after it was removed from your office.

Frank Miller has a Debt Consolidation Blog & Finance, these are some of the articles: Increase In Pay-day Loans Just One Out Of Many Economic Concerns You have full permission to reprint this article provided this box is kept unchanged.