Many years ago, the great John Paul Getty once had the title of title of world wealth. As a basic idea that a cautious company should follow, he published "Leasing what is depreciation - what to buy for appreciation "The saying." Most people in our leasing industry have stated that they are kept in our arsenal as a way to persuade companies to rent equipment.
But what does this mean? Let's break down the declaration into two components and discuss why it makes perfect sense.
First of all, from
"What to buy for appreciation" from
In short, it means having assets with increased value. A cautious businessman usually follows the growth rule, the growth rule. Income growth, company size growth and net value growth.
Few assets can generate revenue and contribute to the company's development. For example, today's $100,000 production facility may cost only $60,000 or $70,000 per year from now on. In fact, the device can reduce costs by 20% and increase efficiency by 30%, but if you buy directly, it actually lowers the company's net worth.
Assets are depreciated at pre-set rates, ranging from 10% to 50%, depending on which level they belong to. In the first year, the depreciation amount is lower than the 50% rule, which means that only half of the depreciation can be used as an expense. The net effect is a very slow write-off for tax purposes and a reduction in the company's net worth over time.
Secondly, from
"What is the value of leasing?" from
, refers to the transfer of ownership of any asset whose value changes over time to a third party, also known as a leasing company. From an accounting perspective, leasing equipment is seen as a form of off-balance sheet financing, which means it will not appear as a liability on the balance sheet. This accelerates the tax impact of the lease, because if the lease structure is reasonable, the payment is considered a fee and is 100% written off from the first day. Off-balance sheet financing has the effect of increasing financial ratios such as debt. Equity, because debt is not included in the balance sheet.
Most leasing companies' business models are driven by adding multiple assets to their financial statements, so they focus on huge depreciation costs. Leasing companies thrive in adding assets to their books, which in turn meets the huge demand for assets to be acquired by organizations.
The last point is explained. Many companies tend to have their own equipment - proud of ownership. It must be noted that if equipment purchases are secured by bank loans or credit lines, they do not actually own the equipment until the final payment. In fact, they own the ownership of the equipment and display the depreciation value as an asset, but the equipment does not return until the loan is fully paid.
Does the company use loans to get equipment? absolute. Does the company use leasing as a means of equipment purchase? absolute. The purpose of this article is to carefully examine the statement made by Mr. Getty many years ago, "What is depreciation for renting – what to buy for appreciation" and how to obtain equipment from a different perspective.
Orignal From: Lease what is depreciation - buy what appreciate
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