Financial leasing (financial leasing), also known as equipment leasing (equipment leasing), or modern leasing (modern leasing), in essence, the transfer of ownership of all its assets or leases the risks and rewards most. The ultimate ownership of the asset is transferred, or may not be transferred.
It refers to the specifics of the lessee, according to the lessor of the leased object and the supplier's choice, the supplier's specific requirements for financing the purchase of leased property, as well as leased to the lessee to use, the lessee pays rent to the lessor in installments, the lease belongs to the lessor of all the object of the long term lease of the ownership of the lease, the lessee has the right to use the leased item. Term expires, and the completion of the lessee to pay the rent under the financial lease contract to fulfill all the obligations, the lease belongs to the lessee all the objects of ownership. Although the financial leasing transaction, the lessor has the identity of the purchase of equipment, but the purchase of equipment suppliers such as the specific requirements of the equipment to choose the substance of the conditions of negotiation of the purchase contract by the lessee to enjoy and exercise, the lessee leasing object is mainly the buyer. , is a loan and trade finance and technology renewal of the new comprehensive financial leasing industry extension. Because of its extension of the loan and function combination, there is a leasing company issues can be recovered, processing leasing, so the main requirements for enterprise credit financing and guarantee, which is very suitable for small and medium-sized enterprise financing. In addition, the piece of financial leasing, rather than reflecting in the financial statements of the enterprise liabilities, does not affect the credit status of the enterprise. This kind of multi-channel financing for small and medium-sized enterprises needs in its conditions are very favorable.
Leasing and financing an essential difference between traditional leasing is: traditional leasing to the lessee of the leased property time rent, financing costs and financial leasing applied to the tenant's rental time. The market economy has developed to a certain stage and a strong financing to adapt to the United States in the 1950s there is a new type of transaction, because it adapted to the requirements of the modern economic development in the rapid development of the world in the 60 to 70, and today has become the main means of financing for the renewal of enterprises, known as one of the equipment of the "sunrise industry". The rapid development of the world from 60 to 70, today has become the main means of financing the renewal of enterprises, known as one of the equipment "sunrise industry". After this mode of operation introduced more than 10 years in the early 80s of the century China has been rapid development, compared with developed countries, the advantages of leasing is still far from being played out, the market potential is huge.
[edit]The main features of leasing
The main features in leasing are: as the ownership of the leased object is the lessor in order to control the rent of the tenant has taken the form of ownership repayment of the risk at the end of the contract may ultimately be transferred to the lessee, the person who leases the contract to choose to purchase the items from the lessor to the lessee to provide financial services only responsible for maintenance. The principle of rent calculation is: the lessor to lease the purchase price of the object based on the funds occupied by the lessor according to the lessee on time, according to the rent agreed upon by both parties. It is essentially related to the traditional leasing financial transactions, is a special financial instruments.
[edit]Types of financial leasing
1. Simple financial leasing
Financial leasing is a simple, by the lessee's choice to purchase the leased property, through the risk assessment of the leasing project after the rent is leased to the lessee to use the object lessor. Throughout the lease period, the lessee does not enjoy the ownership of the right to use, and is responsible for the maintenance and the maintenance of the leased object. Lessor's lease is good or bad is not responsible for any equipment depreciation on the lessee's side.
2. Leveraged lease financing
Leveraged leasing practices similar to syndicated loans, is a specialized leasing and financial leasing tax mainly by the leasing company as the dominant interest in the trunk of large projects, and for a very large project financing lease. First set up by the main body of the operation of a leasing company - based on the project's fund management company to set up the project to provide more than 20% of the total funds, the rest of the bank is the main source of funds and social absorption of idle idle funds, 100% of the use of enjoying the benefits of low-tax "eight Bo" for leasing a large number of funds for leasing projects with the benefit of leverage. The rest of the financing and leasing practices are basically the same, but due to the complexity of the contract involves a wide range, or even greater. As you can enjoy tax incentives, operating norms, comprehensive benefits, security and rent, low-cost recovery, generally used for aircraft, ships, communications equipment and equipment leasing large sets of financial.
3. Entrusted financial leasing
is a kind of possession of funds or entrusted to a non-bank financial institution equipment financial leasing, the lessor is also the first customer, the second is by the lessor at the same time the trustee. The lessor accepts the funds of the principal or the subject matter of the lease, according to the client specified in writing through the leasing business client for the lessee. In the subject of the long-term lease of the property of the leasing client, the lessor only collects, not ventures. One of the main features of this entrusted lease is that it does not lease the right to operate the business, "right to" business. E-commerce is to lease to lease as a business platform rental leasing.
The second is the lessor or lessee by a third party, according to the contract to pay the purchase price, also known as entrusted purchase of financial leasing lessor to purchase the lease entrusted.
4. Project financial leasing
The lessee to the project's own property and to ensure the efficiency, and the lessor to sign a financial lease contract, non-recourse to the proceeds of the property and other items of the lessee of the lessor, we can only rent counted in the project's cash flow and profitability to determine. The seller (i.e., the manufacturer of the leased goods) through its controlling financial leasing company to promote their products in this way and expand their market share. Communications equipment, medical equipment, transportation equipment, and even highway operating rights can be used in this way. Other aspects including lease returns and also sale and leasebacks are known as finance leasing; finance leasing, also known as lease financing.
[edit]Lease financing risk
Financial leasing from the risk of many uncertainties, is multi-faceted, interrelated, in the characteristics of the various risks of business activities, a full understanding of the risk can be comprehensive, scientific risk analysis, the development of appropriate measures. The main categories of lease financing risks are as follows:
(1) product market risk. In the market environment, whether it is financial leasing, loans or investment, such as for the purchase of equipment or technological transformation, first of all, should consider the market risk of leasing equipment products, which need to know the sale of capital long products, market share and occupancy in the market, the consumer structure and the consumer's ability to consume and the psychological development of the product trends. If these factors are not fully understood, the investigation is not careful, may increase the market risk.
(2) Financial risk. For the financial nature of the financial risk of leasing throughout the business activities. Lessor, the biggest risk is the lessee's ability to repay the lease, it has a direct impact on the operation and survival of the leasing company, therefore, the rent is also a risk from the beginning of the project, should cause concern.
Currency is also a risk, especially international payments, payment methods, payment dates, time methods, remittance channels and payment methods improper means, will increase the risk.
(3) trade risk. For property leasing transactions, the risk of trade negotiations are tested separately to order the existence of risk. In a relatively complete modern development of commodity trade, the community also supporting the corresponding institutions and preventive measures, such as credit, transportation insurance, commodity inspection, commercial arbitration and credit counseling risk letter, since the establishment of preventive measures and remedies, but due to the people's awareness and varying degrees of risk, the nature of the business of some methods of understanding of the business and other factors of the lack of experience in the management coupled with the fact that these instruments have been have not been used, allowing trade risks to remain.
(4) Technology risk. One of the benefits of pre-financial leasing to other enterprises is the use of advanced technology and equipment introduction. In the operation of the, or the actual process of advanced technology, advanced technology is mature, for the legitimate rights and interests of others, technology maturity, is an important risk for technical reasons. In serious cases, due to this, the technical problems of the equipment in a paralyzed state. Other risks include the economic environment, force majeure and so on.
[edit]Accounting for finance leases
[edit] Accounting for finance lease lessees
1, Accounting for the start of the lease
At the start of the lease, the lessee usually starts the leased asset at the original book value of the minimum lease payments and? Leased assets of the two go lower, the present value of the minimum lease payments as the recorded value of the recorded value of long-term payables, and the difference between the two is not recognized record financing costs. However, if a small portion of the business's total assets are leased, the tenant may be at the beginning of the record of minimum asset lease and long-term lease payments rent payments. This time, "percentage" does not usually refer to fixed assets financed by the lessee leasing less than 30% (including 30%) of the total asset value. In this case, the rent for the financing of long-term assets and the appropriate amount is determined at the lessee's discretion, it can be used for the minimum lease payments, can also be used in the original leased asset book value of the minimum lease payments and at the lower of the two present value. So what is the "original book value of the leased asset" is the book value of the leased asset as reflected in the accounts at the inception of the lease.
In the calculation of the present value of the minimum lease payments in the lessee, if the interest rate is considered implicit in the lease, the lessor should be used as the interest rate, the discount rate implicit in the lessor, otherwise, the interest rate should be specified in the lease contract as the discount rate. If the lessor's interest rate calculated in the lease implicit interest rate and the lease contract stipulates that it is not available, it should be used in the same period of time as the interest rate of the discount rate of the bank loan. This is implicit in the lease rate, the minimum lease payments in the lease and the present value of the unsecured portion of the residual value of the asset and the present value of the original book value equivalent to the discount rate is recorded.
2, the accounting treatment of the initial direct costs
Initial direct costs are incurred in the lease negotiation and the signing of the lease agreement that occurs during the lease period and can be directly attributed to the cost of the project. The initial direct costs on the lessee's side are usually stamp duty, commissions, attorney's fees, and travel expenses such as negotiation costs. In the initial direct costs the lessee should be recognized as a current expense. Accounts processing: debit "administrative expenses" and other accounts, credit "bank" and other accounts.
3, no finance charges
In financial leasing, the lessee pays rent to the lessor, including principal and interest repayment in two parts. The lessee pays rent, on the one hand, to reduce long-term accounts payable, on the other hand, although not in a certain method of recognizing lease expense, recognizing the current financing costs, the first rent (i.e., initially match each lease payment in this case), the lease term is the first stage of the lease payment is not interested in, should only reduce the long-term loan, rather than recognizing the current financing costs.
The lessee should use a certain method of calculating the finance cost if it is not apportioned in the finance cost. According to the guidelines, the lessee can be used in the use of the effective interest rate, using the straight-line method, or can be used and a combination of methods years. In the use of the effective interest rate method, is in line with the beginning of the lease in accordance with the lease asset and ? Liabilities are recorded on the basis of different finance cost sharing rate options have different values. Finance cost sharing is not specifically divided into the following types:
(1), the lease asset and ? Liability with minimum lease payments to the present value of the recorded value of the investor and interest rate of the lease embedded in the discount rate. In this case, the investor should interest rate in the valuation of the lease embedded rate.
(2), the lease asset and? Liability for the present value of the minimum lease payments for the recorded value, and the lease contract specifies the interest rate as the discount rate. In this case, the lease contract should be at the specified rate of assessment.
(3), the lease asset and ? Liability to the original book value of the leased asset accounted for the lessee's value does not exist in the residual value of the guarantee and preferential purchase option. In this case, the financing should be re-cost-sharing ratio calculation. The financing cost-sharing ratio is the present value of the minimum lease payments at the inception date of the lease at a rate equal to the discount rate on the original carrying amount of the leased asset. The residual value of the security situation in the lessee or a third party with whom the leased asset is concerned, and similarly, at the end of the lease, all unrecognized financing costs should be shared end, the lease liability should also be reduced to zero.
(4), the lease asset and ? Liability is accounted for at the original carrying value of the leased asset to the value of the residual value of the security that does not exist for that lessee, but has a preferential purchase option. In this case, the financing should be recosted at the rate of cost-sharing. At the end of the lease term, any unrecognized financing costs should be *** enjoying the end and the lease liability should be reduced to zero.
(5) The lease asset and ? Liability is recorded value at the original book value of the leased asset and guarantees the existence of the lessee's residual value.
In this case, the cost is shared and the interest rate should be refinanced. Provisions relating to the lessee or in the leased asset as a guarantee of residual value has been or a third party in the absence of renewal of stops and penalties payable at the end of the lease term without recognizing all financing costs should be *** enjoyment of the end of the lease liabilities should also be reduced to the guaranteed residual value, or will be paid for defaults.
The lessee should pay the rent should each bear the amount of rent paid, debit "long-term accounts payable - financial leases," account, credit "bank" account, if the rent paid, which includes compliance costs, at the same time, should be debited with "Manufacturing overhead", "Overhead" and other accounts. At the same time, should be recognized in accordance with the current amount of finance charges, debit the "finance charges" account, credit "no finance charges" account.
4, depreciation of leased assets
The tenant should fund the depreciation of fixed assets provided by the lessee, should address two major issues:
(1), depreciation policy
Asset depreciation, the lease stipulates that the lessee should provide its own depreciation of the asset method. If the lessee or a third party to the leased asset related to the provision of guarantees, the amount of depreciation of fixed assets that should be recorded, and the value of the balance in the lease accounting after deducting the residual value is recorded. If the lessee or a third party with respect to the residual value of the leased asset security provided by a third party, the total amount of depreciation should be recorded for the value of the fixed assets of the lease to start.
(2), depreciable life
Determine the depreciable life of the leased asset shall be in accordance with the lease contract. If it is reasonably certain that the lessee at the end of the lessee will obtain ownership of the leased asset, the lessee can be identified with the remaining full useful life of the asset, and therefore should be leased at the beginning of the lease the remaining use of life as the asset's depreciable life; if you can not reasonably certain whether to be made at the end of the ownership of the leased asset lessee lease the term of the lease and leased the asset's remaining use of the asset in the shorter two is the depreciable life. Years of life.
5, the accounting treatment of compliance costs
Compliance costs, in order to improve the fixed asset expenditure financing, technical consulting and service fees, fees should be increased staff training is charged to shared costs, extended rent, many types of debit "long-term amortization of expenses" and "accruals Expenses", "manufacturing costs", "administrative expenses" and other subjects, fixed assets regular maintenance, insurance, etc., can be directly charged to current expenses, debit "manufacturing costs "and" non-operating expenses "and other subjects, credit" bank deposits "and other subjects.
6, or the accounting treatment of rent
Because of the uncertainty of the amount of rent or can not be rational method to its *** enjoyment of the system, in the actual situation, debit "manufacturing costs" and "non-operating expenditures" and other subjects, credit "bank" and "non-operating expenditures". The actual situation, debit "manufacturing costs" and "non-operating expenses", credit "bank" and other subjects.
7, at the end of the treatment of lease accounting
At the end of the lease, the lessee in the lease is usually three cases, the disposal of assets:
(1), the return of the leased assets. Debit "long-term accounts payable - finance leases" and "accumulated depreciation" account, credit "fixed assets - fixed assets leased all funded" account.
(2) Renewable lease concession assets. If the lessee exercises the option of renewable concessions, the lease shall be deemed to have made the corresponding accounting treatment exists. If not renewed at the expiration of the term, to the lessor under the lease contract to pay liquidated damages, debit the "non-operating expenses" account, credit the "bank" and other accounts.
(3) Accommodation purchase of leased assets. In the lessee enjoys a preferential purchase option to pay the price, debit "long-term accounts payable - finance leases" at the same time credited to the "bank" and other subjects, will be fixed from the "finance lease fixed assets all assets "Details of the details into the discipline of the other disciplines.
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