Truck Leasing
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While working a consulting engagement, a supervisor in your team has given you an assignment. The client is a regional trucking company. A new customer has approached the client with an opportunity that would require 120 trailers 20 more than the trucking company currently owns. The client is uncertain how long the relationship with the customer may last, but the deal has the potential for significant growth.
Your supervisor has asked you to research leases and lease structure issues on the Financial Accounting Standards Board (FASB) website, in particular the current practice and thought related to direct financing, sales type, and operating leases.
Write a memo addressed to your supervisor that summarizes your FASB research results. Keep the memo brief while exploring the issues. Remember that both the client and the supervisor have limited time, and you want to make a good impression. Recommend an approach that the client can use to evaluate and capitalize on this opportunity.
Format your paper consistent with APA guidelines, including appropriate citations and references.
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Solution Summary
The solution discusses truck leasing.
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Please find guidelines and ideas for Truck Leasing Memorandum in the attached file.
Running Head: TRUCK LEASING
Memo
Memorandum
To: Supervisor
From: XYZ
Date: February 15, 2012
Sub.: Research FASB Accounting Standards and Practices Related to Leasing
Introduction
Financial Accounting Standards Board (FASB) is a private organization that is designed to establish or develop accounting standards and principle in order to regulate the preparation of financial reports of the organizations (Financial Accounting Standards Board, 2011). Leasing refers to a process or contract that is used by the firms to obtain rights of using fixed assets like equipments and building for a certain time period by paying regular periodic payment (Deelen, 2003). In this, several issues related to lease and leasing structure that occurs during the development of leasing contract will be explored and discussed. Along with this, accounting standards or principles of FASB related to financial reporting of leasing will be also discussed to identify the worthiness of truck leasing project for client. In the last, an approach will be also recommended that can help the client to measure or assess benefits from truck leasing opportunities.
Issues Related Lease and Lease Structure
In leasing contract, there are several issues related to lease and lease structure or classification of lease that can be faced by both lease and lessor due to current accounting principles and practices of FASB. Similarly, in the case of truck leasing project, the client or regional trucking company can also face issues regarding sales structure. Some of the issues are as follows:
Issue of Lease Rights
The issue related to lease rights is one of the important issues that occur in the leasing due to accounting standards of FASB. In this context, issue related to right to use fixed asset or trailers for the lease term, ownership of leased asset, and lease right in the case different ...
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