Alter Equipment Lease

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Aug 6th, 2022
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How to Alter Equipment Lease

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In this video from Grow By Joe, the host discusses how equipment leasing works and its benefits for financing equipment. Leasing serves as an effective financial tool that can improve cash flow, allowing businesses to acquire new equipment without significant upfront costs. Many business owners mistakenly believe the leasing process is complicated, often due to outdated practices of traditional lenders. The video emphasizes a simplified leasing process developed over the years, aimed at assisting business owners nationwide with easier access to equipment financing and leasing solutions.

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Leasing capital equipment: Lowers upfront costs, compared to buying equipment outright. Reduces the chance that your company gets stuck with obsolete equipment, if your contract specifies upgrades. Transfers the cost of equipment maintenance to the leasing company, again ing to the terms of your contract.
An equipment lease is a contractual agreement between the owner of the equipment and a lessee who wants to use the equipment for a specific period in exchange for set payments. In some cases, the lease allows the lessee to purchase the equipment at the end of the term with a balloon, or large, payment.
2 equipment lease types: Operating and finance There are two primary types of equipment leases: operating leases and financial leases.
ASC 842 for equipment leases While there is a lot to unpack in that short definition, its clear that ASC 842 is the relevant standard when it comes to equipment lease accounting.
The answer depends on your situation. Leasing equipment can be a good option for business owners who have limited capital or who need equipment that must be upgraded every few years, while purchasing equipment can be a better option for established businesses or for equipment that has a long usable life.
2 equipment lease types: Operating and finance There are two primary types of equipment leases: operating leases and financial leases.
An equipment rental is similar to a lease in that a contractor rents equipment for a set time. Renting generally offers more flexibility than leasing and allows you to rent equipment for a shorter time. Renting is often a beneficial option for smaller companies that lack the resources to maintain a larger fleet.
The equipment account in the balance sheet is debited by the present value of the minimum lease payments, and the lease liability account is the difference between the value of the equipment and cash paid at the beginning of the year.

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