To lease or not to lease essay

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To lease or not to lease essay

Finances The lease entered between NeedsSpace and WeHaveIt is for a year term where NeedsSpace agreed to no option to renew or the ability to negotiate a renewal of the lease term.

This lease has been classified as an operating lease. WeHaveIt included two provisions in the lease agreement that NeedsSpace had to follow during the lease term.

The first provision required was for NeedsSpace to perform general repairs and maintenance on the leased property.

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NeedsSpace had placed onto the leased property various leasehold improvements such as temporary walls, HVAC, and carpeting. These leasehold improvements had an economic useful life of 10 years. In this case of NeedsSpace, the requirement is to use the appropriate accounting treatment for the two provisions that were included in the lease agreement.

Provision 1 According to ASC athe lessee have certain obligations for the repair and maintenance of leased property. Provision 1 creates a contractual obligation requiring NeedsSpace to perform general repairs and maintenance on the leased property.

In some repairs and maintenance obligations, the lessee is required to make maintenance deposits to the lessor to protect the leased property and is reimbursed later when the required repairs and maintenance is completed by the lessee according to ASC a through c. Provision 1 does not require NeedsSpace to make maintenance deposits but does require NeedsSpace to perform the repairs and maintenance on the leased property.

Maintenance deposits are related to the maintenance of the lease property and should be accounted for as executory costs and not included in the minimum lease payments.

WeHaveIt is not obligated to reimburse NeedsSpace of its maintenance deposits as it only requires NeedsSpace to perform the repairs and maintenance on the leased property. Provision 2 According to ASC eif a conditional obligation for the lessee exist to perform a retirement activity with the leased property, the lessee accounts for the obligation as an asset retirement obligation ARO unless it is included in the minimum lease payments.

As mentioned above, minimum lease payments of the lessee are payments the lessee is obligated to make on the leased property according to ASC Provision 2 creates an obligation requiring NeedsSpace to restore the leased property to its original condition through the removal of leasehold improvements when the lease term expires.

This obligation is not included in the minimum lease payments as it relates to leasehold improvements not the leased property. As a result, this provision in the lease agreement is accounted as ARO by the lessee. Leasehold improvements in an operating lease are capitalized and amortized over the shorter of the useful life of the leasehold improvements and the lease term according to ASC As the lease NeedsSpace entered into has no renewal option, the lease term of 10 years is the same as the useful life of the leasehold improvements.

NeedsSpace should capitalize and amortize its leasehold improvements over 10 years. The ARO should be recognized as a liability at its fair value when it is incurred and reasonably estimable according to ASC Furthermore, the fair value of the liability is recognized by increasing the carrying amount of the capitalized leasehold improvements according to ASC NeedsSpace should recognize the ARO at the inception of the lease and amortize the costs of removing the leasehold improvements over 10 years.Lease Versus Purchase Essay Sample.

According to “Lease Agreement” (), a lease is “a contract between a lessor and lessee that allows the lessee rights to the use of a property owned or managed by the lessor for a period of time.

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History of Cuban-American Relations

10 Harvard Law Review () When we study law we are not studying a mystery but a well-known profession. the pleasure of cats. This is not an exhaustive history by any means. Rather, I tried to indicate key moments that had an impact on the contemporary or future relations between the two nations.

To lease or not to lease essay

2 QUESTION 1 Owen, the owner of a shopping plaza, leased a store in the plaza to Art, for the operation of an art gallery. The lease described only the interior of the store as. The Complete Guide to Lease Extensions Essay - The complete guide to lease extensions What is a lease.

A lease is contractual agreement between two parties with regards to an item of property. Licensing: This essay is licensed under a Creative Commons license that encourages reproduction with should be given to both and to the author, and sources must be included with any reproduction.

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