FIN 401 Study Guide - Canada Revenue Agency, Purch Group, Operating Lease
7 Feb 2014
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Leasing vs. buying captive finance company - wholly owned subsidiaries to lease out products. Operating leases - s-t lease where lessor is responsible for insurance, taxes: pmt re/ by lessor not enough to fully recover cost of asset b/c s-t, like rental agreement. Tax-oriented leases - fin lease where lessor is owner for tax purposes: most sense when lessee not in position to use tax credits/ dep deductions. Sale and leaseback agreements- fin lease where lessee sells and asset to lessor and then leases it back lessee re/ cash f/ sale of asset lessee contin to use asset. 22. 2: accounting and leasing capital/ fin leases must be capitalized pv of lease pmt calc along w/ liabilities on right side on. B/s and asset on left capital/financial lease if criteria: 22. 3: taxes, canada revenue agency (cra) and leases lessee can deduct lease pmt for income tax purposes under cra.
