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Operating leases can be structured to contain adjustable end-of-purchase options or fair market value purchase options. Cooling Concepts term leases are written as Operating Leases according to the definition below.
Cooling Concepts will offer terms ranging from 12, 24, 36, 48, 60, 72 and 84 month leases on new production or existing fleet equipment.
A full service lease will define the Lessor’s obligation to service and maintain the asset during the course of the lease. Additionally, the Lessor will license the equipment and will pay sales taxes on the purchase of the equipment. The Lessee will pay for all use taxes and will pay for all customer-inflicted equipment damages.
A net lease will define the Lessee’s obligation to service and maintain the equipment, all or in part. Certain net leases will place all obligations on the Lessee; others will split obligation according to trailer, refrigeration unit, or running gear. Net leases will always include specific provisions defining the condition expectations of the equipment upon return.
An operating lease is an off-balance sheet liability that is treated as a current-period expense, as opposed to a long-term financial obligation (a type of debt). Generally, an operating lease is used for equipment that rapidly depreciates or becomes obsolete in a short period of time. The lease term is less than the economic life of the asset. The Lessor books and depreciates the equipment as an asset, and the economic life of the asset. The Lessor books and depreciates the equipment as an asset, and the Lessee expenses the lease payments, usually classifying these payments as an operating expense. The net present value of the rental when discounted at the Lessee’s cost of funds, must be less than or equal to 90% of the original equipment cost.