Is this still considered a capital lease?

  • Creator
    Topic
  • #192981
    Oimie
    Member

    A bargain purchase option is available at the end of the lease but the lessee has no intention or purchasing it. Let’s say it doesn’t meet any of the 3 other requirements for a capital lease.

    And since I’m at it, I might as well also ask,what if the company has the intention, but lacks the ability to purchase it in the future. Is this also considered a capital lease?

    FAR 85 June 2015
    AUD 80 Nov 2015
    REG 83 Nov 2015
    BEC 79 Feb 2016

Viewing 6 replies - 1 through 6 (of 6 total)
  • Author
    Replies
  • #660092
    Mika
    Participant

    You only need one of the four to qualify as Capital Lease

    REG - 80 (02/13/2015) Roger + Ninja Flash Card + Ninja MCQ + Becker's Note
    FAR - 84 (05/29/2015) Roger + Ninja MCQ + Some Wiley book questions
    BEC - 77 (08/27/2015) Roger + Ninja MCQ + Half Wiley book questions
    AUD - 87 (08/28/2015) Roger + Ninja MCQ + Half Wiley book questions

    #660093
    Oimie
    Member

    @Mika: So it doesn't matter whether the company has the intention or ability to purchase it at the end of the lease term?

    FAR 85 June 2015
    AUD 80 Nov 2015
    REG 83 Nov 2015
    BEC 79 Feb 2016

    #660094
    Anonymous
    Inactive

    What I've seen in the real world is that the lease agreement literaly has a buyout of $1 therefore the company can “afford it”. Capital lease is just another form of financing so it's always possible the company could default on the obligation but that doesn't change the classification of the lease.

    #660095
    Oimie
    Member

    @bae-bae: $1 lol. Anyways, I see, thank you.

    FAR 85 June 2015
    AUD 80 Nov 2015
    REG 83 Nov 2015
    BEC 79 Feb 2016

    #660096
    Anonymous
    Inactive

    From what I understand, their intention or ability is irrelevant. All that matters is that there's a bargain purchase option available.

    #660097
    Mika
    Participant

    and the BPO must be below Fair Market Value

    REG - 80 (02/13/2015) Roger + Ninja Flash Card + Ninja MCQ + Becker's Note
    FAR - 84 (05/29/2015) Roger + Ninja MCQ + Some Wiley book questions
    BEC - 77 (08/27/2015) Roger + Ninja MCQ + Half Wiley book questions
    AUD - 87 (08/28/2015) Roger + Ninja MCQ + Half Wiley book questions

Viewing 6 replies - 1 through 6 (of 6 total)
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