When should a company decide to lease something rather than buy it? There are many factors that go into this decision, but today we will talk about residual values. The initial residual value of a capital lease is the guaranteed residual value at the inception of the lease. This number can be found in two places on most leases: 1) in Section C-1 “Initial Residual Value” and 2) on Schedule A-2 “Lease Payments.” Residual values change over time for both leased equipment and buildings, so you need to keep an eye out for them when making decisions about what type of asset to use! — Lease Payments: The lease payments are found in Section C-L “Maintenance, Taxes and Insurance” on Schedule A-Q. Initial Residual Value: the initial residual value is based upon the estimated fair market value of the leased property at commencement of the lease term with depreciation taken into account. This number can be found either in section C-I “Fair Market Value..” or section D-IV “Estimated Fair Market Value.” Their may also be a footnote referencing this estimate which you will find later if not right up front. Transition Managerial Cost: Generally these costs come from things like moving to new locations (if applicable) and setting up utilities for your company’s use as well

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