he FSAB standards, the lease agreement is for the use of the combustion turbine which could qualify as a capital lease because it is an agreement for the use of a piece of property that could be classified as an asset. The first item to be assessed is the legal fees arising in connection with the lease, i.e., $500K to Stipe, Berry, Mills and Buck, together with $1 million in legal fees incurred by Goliath Co. These expenses would fall under the category of external expenses that are not incurred on a sustained basis, but rather are a one-off expense. They do not fall under the category of a recurring expense and moreover, the total value of the payments as mentioned above, is unlikely to add up to a sum that is greater than 90% of the fair value of the leased asset, i.e., the combustion turbine. This expense can however be included in the Balance sheet of the Company as an establishment expense, which would fall under the category of a one-time expense for setting up the lease. The advantage of this method is that it could contribute towards the payment of lower taxes to be paid on incomes gained from the leased property during the first year of lease.
In regard to the second provision, the lease is a capital lease that would fall under the category of a direct financing lease, because lease payments are being made by a bank and Goliath Company which is leasing out the asset does not gain any share in the profits of Big Bear. The default provision in the lease requires a penalty payment from Big Bear if there is a “material adverse change” in its financial condition. Although this term is not specifically defined under the agreement, nevertheless the direct inference would be construed as any change in financial circumstances that lead to Big Bear being unable to make its payments. The inclusion of a penalty payment is a fairly standard provision within a lease document, but the instigating factor is a default in the bank’s credit arrangement. This ...
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(Lease Essay Example | Topics and Well Written Essays - 500 Words)
“Lease Essay Example | Topics and Well Written Essays - 500 Words”, n.d. https://studentshare.net/miscellaneous/392115-lease.
A capital lease is a lease in which the lessee gains ownership at the end of the contract. The four criteria to determine whether a lease is a capital lease are:
1. The lease transfers ownership of the property to the lessee
2. The lease contains a bargain purchase option
The lease agreement enables the two parties to do a form of accounting transaction at a price deemed necessary. The Financial Accounting Standards Board (FASB) explains that a contract does need any entity to determine the initial direct costs that occurred before August, 2010, which is the official effective date for the changes made.
In 2010, Peter Taylor signed a lease agreement with Jeffrey, allowing Peter occupy the top floor flat for a period of five years. Peter travels a lot for business and so spends a number of months each year outside of the country. Currently, Jeffrey has found himself with financial constrains, and his marriage is being under increased strain.
Several items in the Lease agreement should be changed to make my life as a tenant of Lucifer Leasing Company comfortable. The Lease Agreement should have option clauses that will enhance flexibility of all tenants through offering, subletting and reassignment or transfer of leasing rights (Jacobus 282).
A legal agreement (lease) is put in place with the freeholder. The agreement shows the number of years the leaseholder will own the property. When the lease ends, the ownership of the property is returned to the freeholder. The leaseholders are also referred to as tenants or lessees while the freeholders are also referred to as a property owner or lesser.
For instance, the history goes back to 1888 in which a French expert Alphonse Bertillon “Anthropometrics” who used fingerprints to distinguish between criminals and innocent public. However, after a century, technology of biometrics is still evolving and has become more complex to ensure greater security to the users.
A buyer tenders an offer in writing with a purchase contract and deposit receipt to seller. The seller either accepts the offer or counter offers go back and forth until there is acceptance. This contract, when executed, defines the ongoing rights and obligations of the parties to each other for a period of time.
A lease of land involves both proprietary and contractual rights for both the landlord and the tenant, and so is subject to contradictory pressures. A tenant is the 'owner' of land, albeit temporarily and subject to restriction but equally he is a consumer contracting for the provision of 'service'.