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Gol Linhas purchases 737 additional 28 MAX aircraft update speedup

 
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Half of our equipment is owned through finance leases and the other half is operated under operating leases, providing flexibility to increase or decrease supply on demand.
 

Brazil's Gol Linhas has signed an additional purchase of 2021 Boeing 8 MAX aircraft on Tuesday, August 3, 737 ... → Continue reading

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Owned equipment

lease

lease(lease) Means that the leasing company purchases the machinery and equipment selected by the company, etc., and purchases the property for the company for a relatively long period of time.Rentto be[1]..There are used properties, but in many cases, new properties are rented after the leasing company purchases them.Although the ownership of the goods belongs to the leasing company, the company can use the property in almost the same way as when it was purchased in-house, so it is widely used as a means of capital investment all over the world including Japan.

Overview

Modern leasing developed in the United States and is now widely used worldwide.The largest market in the United States is $ 2,080 billion (lease ratio 31.1%), followed by Japan at $ 688 billion (8.7%) and Germany at $ 483 billion (21.7%).[2].. From the fourth onward, France will be $ 4 billion (263%), Italy $ 15.4 billion (240%), the United Kingdom $ 7.6 billion (189%), and Canada $ 14.2 billion (141%).In recent years, the number of BRICs countries that have been developing rapidly is about 22.0 billion to 10 billion dollars, and it is expected that the use of leasing will spread rapidly in the future.

Accounting definitions are defined by the accounting standards of each country, and in JapanCorporate Accounting Standards CommitteebyAccounting Standards for Leasing TransactionsAnd by the same commentary and opinion, in the United StatesUS GAAPHeadquartered in London, UK, France, Germany, Spain, UK, etc. by FAS No.13International Accounting Standards BoardSet by (IASB)International financial reporting standards(Less thanIFRS) Defined by IAS No. 17 (based on US Lease Accounting Standard FAS No. 13)[3].

In particularIFRSIs rapidly expanding worldwide, Europe,ロシア,BrazilIt is widely adopted in the world.IFRSThe method of introducing the above differs from country to country. For example, in Europe, regarding the consolidated financial statements of companies listed on the regulated market to which the EU unified rules apply.IFRSIt is required to create with.However, the accounting standards of the home country are maintained for non-consolidated financial statements, and leasing is available in both France and Germany.RentIt is a process.[4]

In the United StatesIFRSThe specific direction and schedule of introduction are not shown.

in JapanIFRSFrom the fiscal year ending March 2010, only the consolidated financial statements of listed companies that meet certain requirements will be dealt with.IFRSHowever, in June 2013, as an immediate policy, (6) pure IFRS, (4) Japanese GAAP, (XNUMX), and (XNUMX) endorsed IFRS (individual IFRS standards will be examined one by one). However, the idea that the four criteria of (IFRS introduction) coexist after being deleted or modified as necessary is shown.[5]

As of 2013 month,IASB(International Accounting Standards Board)FASBThe Financial Accounting Standards Board has published a revised Exposure Draft "Lease".Among them, it is proposed to process all leases on-balance sheet, but it is not clear whether it will be finally standardized.[6]

The definition under tax law is defined by the tax law of each country.

History

leaseThe word has a long historyAncient Roman EmpireIt goes back to the times.At that time, shipowners leased ships to merchants engaged in the Mediterranean trade, and landowners rented land to others for agricultural land.Over time, it evolved into urban real estate leasing in the United States, with significant development in the United States from the 1800s to the early 1900s.The beginning was leasing, which mainly handled real estate, but it was the United States that led to the great use of leasing as a means of capital investment, mainly for movables in modern times.Civil WarIt is said that the rental of shoemaking machines by United Shoe Machinery Co., Ltd. at that time began.Then, in 1877, telephone leasing began by the Bell Telephone Company, and from this time on, movable property leasing began in earnest.

In the early 1900s, leasing was used and developed as one of the sales and sales tools of companies.In other words, the machine manufacturing company sells the product as a lease instead of selling it to the customer as a sold-out product, so that the customer's machine replacement time can be controlled according to the lease period. The strategic purpose was to maintain a permanent relationship with the customer by selling the product on a lease again.Such a method has become widespread not only in industrial machine manufacturing companies but also in office equipment manufacturing companies such as IBM and Xerox, and leasing will be used by a wide range of companies.

Leasing is a form of transaction developed mainly in the United States, but the birth of a company called a general leasing company whose main business is leasing with strong financial implications was established in 1952 after World War II by US Leasing. Until its establishment, it was mainly used as a powerful sales tool for machine manufacturing companies. US Leasing has been widespread in society by then, and responded to the vigorous demand for capital investment funds for the transition from the munitions industry to the peace industry after World War II. It was established in that respect, and the establishment of the company is currently defined.leaseIt will be a pioneer of karma.Then in 1963, the first leasing company in Japan,Japan Lease InternationalHas spread to the world, and is now widely used as a means of capital investment all over the world.

Basics of leasing

LeaseFinance leasingWith contractOperating leaseIt is roughly divided into contracts.Although there are differences in details depending on the accounting system and tax system adopted by each country, it can be explained as follows.

Finance leasing

Finance leasingIs literally a financially strong contract as one of the means of raising funds for the purpose of introducing equipment, non-cancellable (non-cancellable) and full payout (getting all the profits from the property and related to the property) Those that meet the two conditions of (pay all costs).In most cases, the leasing contract is a contract that pays a penalty to the leasing company if the company renting the property cancels before the end of the lease period, and even if the contract is canceled halfway, the total payment amount is larger than the case of renting until the end of the lease. Will never be cheaper.For this reason, even if there is no premature cancellation prohibition clause, it is considered that premature cancellation is virtually impossible, and it is classified as a finance lease as described above.Since the contract has a strong financial color, on-balance sheet processing of leased assets is required.

Operating lease

Operating leaseIs a contract with a strong sense of lease, such as setting a residual price after the end of the lease period and being able to cancel the contract halfway.Unlike finance leases, off-balance sheet processing of leased assets is permitted because the contract is strongly leased.

When the lease period of the initial contract is reached, it is possible to renew the contract every year by concluding a re-lease contract at a lower price than the original lease setting amount (lease fee for one month + α). ..There is also a contract that allows the lessee company to purchase the leased property that it has rented.

Since the owner of the property is a leasing company, the leasing company is responsible for recording tax obligations and depreciation expenses caused by the ownership of the property and paying insurance premiums for the leased property.In addition, since leasing transactions are the same as loans for banks for leasing companies, they are subject to stricter examinations because they often do not take collateral.

Lease fee structure

The total lease fee is as follows.Of the operating leases, those that set the residual value of the property deduct the residual value from here.

  • Total leasing fee = (property acquisition price + taxes + financing cost + insurance premium + commission (leasing company profit, management cost))

Lease contracts are financially strong, but unlike the case of receiving a loan from a bank, leasing fees cannot be simply compared by interest rates.This is because the cost of movable property comprehensive insurance differs depending on the leasing company, and even if the interest rate is low, the leasing fee does not necessarily decrease.Therefore, in comparison of leasing fee levelsLease rateIs being used.The formula for calculating the lease rate is as follows.

  • Lease rate = (Monthly lease fee ÷ Property acquisition price)

If you lease a property of 100 million yen with a monthly lease fee of 18,500 yen, the lease fee rate will be 1.85%.

Advantages of leasing

The advantages of using a lease differ depending on the accounting standards and tax systems adopted by each country, but the general advantages are as follows.Details will be described on the leasing page of each country.

  • Cost leveling is possible
  • Early costing is possible
  • You can reduce cash out at the time of purchase
  • Off-balance processing is possible under certain conditions
  • Labor saving
  • Can save a bank's credit line

Leasing around the world

Details of leasing differ depending on the accounting standards and tax systems adopted by each country, so each region will be described separately.

Leasing in Europe

Leasing in the US

Leasing in Japan

IFRS New Lease Accounting Standards

The IASB (International Accounting Standards Board) and FASB (US Financial Accounting Standards Board) launched a leasing project in March 2007 to begin deliberations on a complete revision of leasing accounting. The discussion paper "Lease: Preliminary Opinion" was published in March 3, and the Exposure Draft "Lease" was published in August 2009.[7]However, a number of comments were submitted that were concerned about its content.The leasing project was scheduled to end in June 2011, but after receiving numerous comments, it took a considerable amount of time to redeliberate, delaying the end of the project and making significant changes from the Exposure Draft. As a result, the revised exposure draft "Lease" was published in May 6.

Under the current lease accounting standards, leases are divided into finance leases and operating leases, each of which has a different accounting method. It is proposed that the lease segment be removed and the lessee record the right-of-use asset and the lease liability.

Exposure Draft (August 2010)

The Exposure Draft was published in August 2010, and in Japan the Exposure Draft (Japanese version)PDFIn addition,Corporate Accounting Standards Committee(ASBJ) Summarizes the Issues in the Exposure Draft "Arrangement of Issues Concerning Lease Accounting"PDFWas announced, and the incorporated associationLeasing Business AssociationIs an outline of the summary of the issues, "Outline of" Arrangement of issues related to lease accounting ""PDFHas been published.

Definition and scope

The Exposure Draft defines a lease as follows, and states that the decision is based on the substance of the contract.

"A contract in which the right to use a specific asset (underlying asset) is transferred in exchange for consideration over a period of time"[8]
"Specific asset" is not included in this definition as the asset cannot be "specified" if the lessor can provide an alternative asset during the lease term (a contract in Japan that rents with inventory).[9]..In addition, the "right to use" is the right to control the use, and even if you order another company to operate the asset, you have this right if you receive a substantial benefit. Is said to be[10].

Those that meet the following conditions are excluded from the scope of IFRS New Lease Accounting Standards.

  1. Contracts recognized as buying and selling assets
    • The current ownership transfer finance lease.Regarding the accounting treatment of the lease this timeLicense modelA new method called is proposed, and it is necessary to distinguish it from the trading process.
  2. Leasing of intangible fixed assets, etc.
    • Software, license contracts, etc.
    • Biological resources
    • Leases for exploration or use of minerals, oil, natural gas and similar non-renewable resources

The handling of non-core assets was also discussed, but this is considered to be the scope of application.Non-core assets are small-value assets under the current accounting standards for leases in Japan and assets for which lease processing is permitted because the lease term is within one year.[11].

Accounting

IFRS, US, Japan's current accounting standards for leasingFinance leasing(Capital Lease)Operating leaseAlthough it is classified as, it is proposed to abolish this distinction.The distinction has been abolished and all contracts that fit the definition of lease aboveLicense modelThe lessee represents the right to use the leased asset as an asset when accounted for by a new concept calledRight to useAs a debtLease payment obligationRecognize[12].

Main leased items

Basically, there is nothing that cannot be leased, and there are a wide variety of real estate, movables and target properties.

Related item

footnote

[How to use footnotes]
  1. ^ Yuji Morizumi "Actual Lease Transactions (2000rd Edition)" Nikkei Bunko 12 pXNUMX.
  2. ^ Kenji Kato "A book that gives a good understanding of the basics and mechanism of the latest leasing transactions" See Shuwa System 2006 P145, and the same applies to data such as the lease ratio.
  3. ^ Yuji Morizumi "Actual Lease Transactions (2000rd Edition)" Nikkei Bunko 185 pXNUMX.
  4. ^ Corporate Accounting Council / Planning Subcommittee Material European Survey on IFRS Business Trip (France / Germany / EFRAG) Survey Report
  5. ^ Corporate Accounting Council Immediate policy on how to comply with International Financial Reporting Standards (IFRS)
  6. ^ Corporate Accounting Standards Committee Revised Exposure Draft "Lease" (Japanese translation)
  7. ^ English version and Japanese versionIASB Home Page "Leases"It is published in.
  8. ^ See IFRS New Lease Accounting Standards Exposure Draft Appendix A.
  9. ^ IFRS New Lease Accounting Standards Exposure Draft Appendix B1-B3
  10. ^ IFRS New Lease Accounting Standards Exposure Draft Appendix B4
  11. ^ Corporate Accounting Standards Committee “Arrangement of Issues Concerning Lease Accounting” P30.
  12. ^ IFRS New Lease Accounting Standards Exposure Draft P8

References

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