Forklifts, $1 buyout Finance lease Sample
Equipment, leased from Valley Equipment Finance. Commenced Oct 1, 2025, ends Oct 1, 2030.
- Term
- 60 months, paid in arrears
- Discount rate
- 8.00%
- Liability at commencement
- 91,239.77
- ROU at commencement
- 91,239.77
- Amortized over
- 120 months
- Transfer of ownershipNot metOwnership of the asset transfers to the lessee by the end of the term.
- Purchase option reasonably certainMetA purchase option the lessee is reasonably certain to exercise.
- Major part of remaining economic lifeNot met, 50.00%Lease term ÷ remaining economic life, compared with the policy threshold.
- Substantially all of fair valueMet, 96.04%Present value of lease payments (including any probable residual value guarantee) ÷ fair value, compared with the policy threshold.
- Specialized assetNot metThe asset has no alternative use to the lessor at the end of the term.
Conclusion: finance lease. Not eligible for the short-term election.
Initial measurement
| Present value of lease payments (lease liability) | 91,239.77 |
| Plus: prepaid rent | – |
| Plus: initial direct costs | – |
| Less: incentives received | – |
| ROU asset | 91,239.77 |