FINANCIAL LEASING
Under a financial lease, the leased equipment are capitalised on the lessee's balance sheet and the current value of the lease instalments is entered as a liability. The interest portion of the lease instalment is accounted for as an expense in the profit & loss account.
The main features of the lease are:
- The lessee has a purchase Option, which is agreed at the time the lease is signed
- VAT is payable on the monthly lease instalments.
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Benefits for you:
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Lease specifications:
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- Access to government subsidies enables you to reduce your capital spending
- The differences between the depreciation amount and the market value of the assets enables you to create hidden reserves
- Monthly instalments
- Option to buy the assets at the end of the lease term, without obligation
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- Lease term: 12 to 120 months
- Minimum amount: € 100.000,-
- Currency: Euros
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Finance (Financial) leasing
According to IAS 17, a financial lease is a lease that transfers, from the lessor to the lessee, substantially all the risks and rewards related to the ownership of an asset. A financial lease will be capitalized in the lessees balance sheet, even if the legal title of ownership has not been transferred from the lessor to the lessee. IAS 17 provides a number of criteria to distinguish financial leasing from -> operating leasing. The distinction according to national regulations varies from country to country. Typically, a financial lease is a full-pay-out, non-cancellable agreement, in which the lessee is responsible for maintenance, taxes and insurance.
Sale and Financial Lease Back (with or without right to sublease)
An arrangement whereby SGEF purchases equipment from a lessor (manufacturer or distributor) or from a company owning and using it; the equipment is then leased back to the original owner, which continues to use it or leases it on.