Sales-type lease

Sales-type lease

The leasing out of a firm's own equipment, such as a printing company leasing its own presses, thereby competing with an independent leasing company.

Sales-Type Lease

A lease whereby a company rents its own assets that it needs to run its business. For example, an automobile factory may lease its machinery to another factory.
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If any of the five criteria [briefly, 1) ownership is transferred at the end of the lease term; 2) a bargain purchase option for the leased asset exists; 3) the lease term does not commence near the end of, and is primarily for the remaining economic life of, the leased asset; 4) the present value of the lease payments and residual value guarantees is greater than or equal to substantially all of the fair value of the leased asset; or 5) the leased asset has no alternative use to the lessor at the end of the lease term] is met, the lease is evaluated as a sales-type lease.
The second quarter results included total lease rental and finance and sales-type lease revenues of USD 195.
Unrelated to the internal review, the revised financial statements also corrected for an accounting error, primarily for understated interest income, related to a sales-type lease transaction within the Electronic Systems segment and previously identified immaterial errors already recognized in the financial statements but not recorded in the appropriate periods.
GAAP, the lease could be treated as a sales-type lease or direct financing lease for HF.
For a sales-type lease, the selling price is more than the cost of the asset and a sale is recognized by the lessor at the inception of the lease.
Unrelated to the internal review, the financial statement revisions also corrected the accounting for a sales-type lease transaction in the Electronic Systems segment that began in 2004 and ends in 2023 for flight simulators, which increased pre-tax income by USD28 million, primarily for interest income, for periods prior to 2014.
If so, in a sales-type lease, the lessor reports such profit as income at the inception of the lease, offset by commissions or other selling costs.
8 million from the third quarter of 2005, and higher sales-type lease revenues.
The revision to the presentation provides for the Company to a) recognize cash flows related to the gain on sale of leased property and sales-type lease income as investing activities rather than operating activities, b) recognize cash flows related to property acquired for transactions in process as investing activities rather than as operating cash flows, and c) separately present cash outflows and inflows related to lease investments.
First quarter global instrument revenue declined $5 million as compared to prior year, primarily due to a lower percentage of instruments placed under sales-type lease arrangements in the United States.
30, 2005 2004 Direct finance income $4,950 $4,222 Interest and investment income 307 273 Total direct finance and interest income 5,257 4,495 Interest expense on deposits 458 165 Provision for lease losses 402 - Net direct finance and interest income after provision for lease losses 4,397 4,330 Other income Operating and sales-type lease income 955 1,026 Gain on sale of leases and leased property 3,266 1,963 Other fee income 156 131 Total other income 4,377 3,120 Gross profit 8,774 7,450 Selling, general and administrative expenses 4,789 4,863 Earnings before income taxes 3,985 2,587 Income taxes 1,544 996 Net earnings $2,441 $1,591 Basic earnings per share $0.
CALIFORNIA FIRST NATIONAL BANCORP Consolidated Statement of Earnings (000's except per share data) Three Months Ended September 30, 2004 2003 Direct finance income $4,222 $4,630 Interest and investment income 273 93 Total direct finance and interest income 4,495 4,723 Interest expense on deposits 165 64 Provision for lease losses - 78 Net direct finance and interest income after provision for lease losses 4,330 4,581 Other income Operating and sales-type lease income 1,026 1,173 Gain on sale of leases and leased property 1,963 2,332 Other fee income 131 225 Total other income 3,120 3,730 Gross profit 7,450 8,311 Selling, general and administrative expenses 4,863 4,597 Earnings before income taxes 2,587 3,714 Income taxes 996 1,430 Net earnings $1,591 $2,284 Basic earnings per share $0.
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