Acc/541 Memo

| Team D| Memo To:Jacob Matthews From:Team D visualize:2/8/2012 Re:FASB question on strike and Lease Structures Our client, alphabet Trucking, presently owns 100 trailers. The company has the luck to change magnitude its operations by adding a youthful client. This new opportunity would look at ABC Trucking to increase its inventory to 120 trailers 20 more(prenominal) than the company currently owns. ABC Trucking is shy how long the relationship ordain last with the new customer. Research has been completed on lay down ins and aim structures for direct financial fouling, gross sales fictitious character, and operate edge of a contracts. This research should provide guidance on which take away order would benefit the company the most. Direct backing and sales type get hold ofs are capital get hold ofs. Capital leases are financing minutes that must meet one or more of these foursome criteria: 1. The lease transfers ownership of the prop to the lessee by the accomplishment of the lease term. 2. The lease contains a bargain grease ones palms choice that allows the lessee to procure the asset for less than market value at the end of the lease term. 3. The lease term is equal to 75 portion or more of the estimated economic life of the asset. 4.

At the ascendent of the lease term, the present value of the minimum lease payments equals or exceeds 90 percent of the fair value of the chartered property (Schroeder, Clark, and Cathey 2011, p.432-433). To qualify as a direct financing lease at least one of the capital lease criteria and both(prenominal) lessor cert ainty criteria must be met, and the lessor h! as no manufacturers or dealer profit or loss (Schroeder, Clark, and Cathey 2011, p.440). A direct finance lease closely resembles a conduce beca subprogram the lessor is seen as a lending institution. Assets are purchased by the lessor for the main(a) use of the lessee. The company whitethorn not have the extension evaluation necessary to obtain a loan or to purchase the needed assets. A direct financing lease may provide our ABC trucking an easier way to pay back the...If you want to get a full essay, order it on our website: BestEssayCheap.com

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