Uploads Resources 2112 Capital Lease Determination Revised July 09

7/29/2013
NORTH DAKOTA UNIVERSITY SYSTEM CAPITAL LEASE DETERMINATION INSTRUCTIONS
This worksheet was designed to determine if a lease is a capital lease or operating lease. Complete the cells in the "Analys then click on the "Calculate Capital or Operating" button (this button must be clicked again if data is changed in Col. E). "Amortization Table" button and fill in the requested information. Click "OK" to see an amortization schedule for the lease Click on the "Terms" sheet to see the calculation results.
The worksheet uses the four tests for a capital lease from FASB 13 - Accounting for Capital Leases. If a lease meets any one following four tests, it is a capital lease.
If at its inception, a lease meets one or more of the following four criteria, the lease is classified as a capital lease by the lesse Otherwise, it is classified as an operating lease: a. The lease transfers ownership of the property to the lessee by the end of the lease term. b. The lease contains a bargain purchase option- (ie., for $1 the lessor may purchase the equipment).
c. The lease term is equal to 75 percent or more of the estimated economic life of the leased property. However, if the begi the lease term falls within the last 25 percent of the total estimated economic life of the leased property, including earlie this criterion shall not be used for purposes of classifying the lease.
d. The present value at the beginning of the lease term of the minimum lease payments, excluding that portion of the paym representing executory costs such as insurance, maintenance, and taxes to be paid by the lessor, including any profit thereon exceeds 90 percent of the excess of the fair value of the leased property to the lessor at the inception of the lease over an investment tax credit retained by the lessor and expected to be realized by him. However, if the beginning of the lease term the last 25 percent of the total estimated economic life of the leased property, including earlier years of use, this criteri used for purposes of classifying the lease. A lessor shall compute the present value of the minimum lease payments using th rate implicit in the lease. A lessee shall compute the present value of the minimum lease payments using his incremental borr unless (i) it is practicable for him to learn the implicit rate computed by the lessor and (ii) the implicit rate computed by than the lessees incremental borrowing rate. If both of those conditions are met, the lessee shall use the implicit rate. The worksheet makes all calculations for the lease once the correct information is input on the "Analysis" sheet. The follow used to explain the logic behind the calculations. Determining the Amount to Capitalize: The amount to be capitalized for the lease is the lower of the total present value or the fair market value. The total prese calculated by using the lower of the lessors implicit rate (if known) or the lessees incremental borrowing rate.
Determining the Interest Rate to use to Amortize Lease Payments: If the total present value is less than the fair market value then you use the interest rate used to calculate the total pres of lessors implicit rate or the lessees incremental borrowing rate). If the fair market value is less tn the total present must impute an interest rate. To impute you use trial and error to figure the interest rate that makes the present value of payments and bargain purchase option (if present) equal to the fair market value. The present value of the lease payments is as an annuity while the bargain purchase option is a single lump sum payment.
Bargain Purchase Options: A bargain purchase option if present (test 2) will affect the lease calculations in two ways. First it must be used to imput rate if necessary. Second the bargain purchase option is considered the final payment on the lease in the amortization sched means that after the final lease payment the lease principal remaining should equal the bargain purchase option. If the leas are made at the beginning of the period (annuity due), there is some interest that accumulates between the last payment and payment of the bargain purchase option which will be reflected in the bargain purchase option payment. An example of a lea bargain purchase option is included with this documentation.
160994980.xls.ms_office/Documentation
7/29/2013 bargain purchase option is included with this documentation. Last updated 07/01/09
7/29/2013
. Complete the cells in the "Analysis" sheet, n if data is changed in Col. E). Click on the mortization schedule for the lease payments.
tal Leases. If a lease meets any one of the
ssified as a capital lease by the lessee.
he equipment).
eased property. However, if the beginning of ased property, including earlier years of use,
s, excluding that portion of the payments he lessor, including any profit thereon, equals or the inception of the lease over any related , if the beginning of the lease term falls within arlier years of use, this criterion shall not be e minimum lease payments using the interest payments using his incremental borrowing rate the implicit rate computed by the lessor is less ee shall use the implicit rate.
n the "Analysis" sheet. The following items are
ir market value. The total present value is ental borrowing rate.
used to calculate the total present value (lower e is less tn the total present value then you that makes the present value of the lease esent value of the lease payments is calculated
. First it must be used to impute the interest n the lease in the amortization schedule. This argain purchase option. If the lease payments ulates between the last payment and the ption payment. An example of a lease with a
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LEASE INFORMATION Answer all questions. If answer is none, enter 0 Date completed: Completed by: Does the lessee assume ownership? (Y/N) Fair market value of asset at lease inception Asset's total economic life Asset's remaining economic life Amount of down payment or trade-in (if any) Minimum lease payment Bargain purchase price (if any) Lessor's inv tax credit at lease inception (if known) Lease term in years Lease payment structure: (A)nnual / (S)emi-Annual / (Q)uarterly / (M)onthly (B)eginning of periods / (E)nd of periods Lower of the lessee's incremental borrowing rate or, if known, the lessor's implicit rate
NORTH DAKOTA UNIVERSITY SYSTEM CAPITAL LEASE DETERMINATION Leased Item: 0 [ALL FORMULA DRIVEN, NO DATA ENTRY NECESSARY] Test 1: Lease Transfers Ownership Does the lessee assume ownership? (Y/N) Test 2: Bargain Purchase Option Is there a bargain purchase option? (Y/N) Bargain purchase price Present value of bargain purchase price Test 3: Term = 75% of Economic Life Lease term in years Asset's total economic life Asset's remaining economic life Percent of remaining life at start of lease Test 4: Present Value of Lease Payments Minimum lease payment (A)nnual / (S)emi-Annual / (Q)uarterly / (M)onthly (B)eginning of periods / (E)nd of periods Fair market value of asset at lease inception Amount of down payment or trade-in Lessor's inv tax credit at lease inception Lower of the lessee's incremental borrowing rate or, if known, the lessor's implicit rate Conclusion: ## 0 MISCELLANEOUS CALCULATIONS Number of annual payments Present value of MLP Lessee's total present value PV-of-payments/Mkt value Computed imputed interest rate CHECK FREQ. OF PAYMENTS #VALUE! #VALUE! #VALUE! NA 01/00/00
If the lease transfers ownership, then it is a capital lease.
Institution:
0 N $0.00 #VALUE!
If the lease contains a bargain-purchase clause allowing you to buy the asset for substantially less than fair value of the asset at the end of the lease, it is a capital lease.
0 0.00 0.00 0.00 #DIV/0!

If the lease term equals 75% or more of the asset's estimated economic life, it is a capital lease. However, if the beginning of the lease falls within the last 25% of the asset's total estimated economic life, it is NOT a capital lease.
## $0.00
If the present value of the minimum lease payments (plus downpayment and pv of bargain purchase) is 90% or more of the asset's fair value, it is a capital lease.
$0.00 $0.00 $0.00 0.00%

The amortization table will determine whether to capitalize the asset at the lower of FMV or the PV of the MLP. If FMV is used, the imputed rate will be calculated and used in the table.
##
Low Mid High PV Payments PV BPO Total PV
Calculation of imputed rate 0.052350976 5.24% 0.052350979 #VALUE! #VALUE! #VALUE!
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LEASE AMORTIZATION TABLE LESSOR: LEASE CLAUSES: First Payment Date: Capitalized Value: Lease Obligation: Interest Rate: Annual Payment: Term of Lease: Capital Lease Criteria: PAYMENT # #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! LESSEE: DESCRIPTION OF LEASED ITEM:
#VALUE! #VALUE! #VALUE! #VALUE! per year $0.00 0.00 years #DIV/0! INTEREST EXPENSE #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! LEASE OBLIGATION #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE!
DATE 1/0/1900 #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE!
PAYMENT $0.00 #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE!
PRINCIPAL #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE!
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160994980.xls.ms_office/Amort_Table
#VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE!
#VALUE! 7/29/2013 #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE!
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#VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE!
#VALUE! 7/29/2013 #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE!
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Uploads Resources 2112 Capital Lease Determination Revised July 09

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Uploads Resources 2112 Capital Lease Determination Revised July 09

Загружено:

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7/29/2013

NORTH DAKOTA UNIVERSITY SYSTEM CAPITAL LEASE DETERMINATION INSTRUCTIONS

tal Leases. If a lease meets any one of the

ssified as a capital lease by the lessee.

n the "Analysis" sheet. The following items are

ir market value. The total present value is ental borrowing rate.

0 0.00 0.00 0.00 #DIV/0!

$0.00 $0.00 $0.00 0.00%

Low Mid High PV Payments PV BPO Total PV

Calculation of imputed rate 0.052350976 5.24% 0.052350979 #VALUE! #VALUE! #VALUE!

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