Model Amortization [R0109]

The Model Amortization report [R0109] provides lease structuring and amortization capabilities for leases. Given basic information (e.g., acquisition cost, residual, etc.), this report can determine the payment amount for a specified yield, or the yield for the given payment schedule. An amortization schedule can be prepared detailing depreciation, remaining net investment, income, and payment information for the lease information entered. The report may be accessed through the Strategic Management report menu [R01].

Contents

• Screens
  • Output Mode
  • Amortization Input
  • Amortization Input (Vehicle Finance)
  • Report Options
  • Participation
    
    
• Lease Information Report
• Model Amortization Report
  
  
• Vehicle Finance
  • Output Mode
  • Company Format Report
  • Customer Format Report

Output Mode

This screen appears when the lease number is selected.

• COMPANY (M) OR CUSTOMER (S) OUTPUT
  Enter ‘M’ for Company mode to be displayed, or enter ‘S’ for the Customer mode to be displayed. The LeasePak default value is ‘M’.

  The Company (M) mode will display all pertinent information regarding the trace information and transaction details of the lease. The Company report is intended for in-house use.

  The Customer (S) mode will only display the account past history and assumed receipts for future payments. The report displays payment number, due date, payment amount, principal, interest, balance and other charges. The Customer report is intended to be viewed by the customer.

• SEND THE OUTPUT AS LETTER Y/N
  This field is available only when the Vehicle Finance module is purchased. Select ‘Y’ for the report to send the output file to the letter module. The LeasePak default value is ‘N’, this will not send the output file as a letter.

Amortization Input

This screen appears when no lease number is entered.

• ACQUISITION COST
  Enter the original acquisition cost of the asset. ACQUISITION COST is included in the capitalized cost of the lease.
  
  
• DOWN PAYMENT
  Enter the down payment for the lease. Down payment immediately reduces the capitalized cost of the lease.

  If Down Payment is informational only, this field will not be populated with the Down Payment amount entered for the lease. The TOTAL field in the report will default the informational down payment amount.

  Note: If the DOWN PAYMENT IS INFORMATIONAL ONLY switch in Miscellaneous Customization option of the Portfolio update is set to Y, this field may be informational only and have no impact on calculation of yields, payments, invoices or G/L transactions.

• OTHER CHARGES
  Enter any other charges for the lease. OTHER CHARGES increases the capitalized cost of the lease.
  
  
• INITIAL DIRECT COSTS
  Enter the initial direct costs associated with the lease. INITIAL DIRECT COSTS may be documentation fees, broker fees, and/or a bad debt allowance. INITIAL DIRECT COSTS increases the capitalized cost of the lease. Refer to the LeasePak Calculations document for more information about initial direct costs.
  
  
• SECURITY DEPOSIT
  Enter the security deposit for the lease, if applicable. SECURITY DEPOSIT is included in the yield calculation.
  
  
• RESIDUAL
  Enter the estimated market value at lease termination. If an amount is entered, the RESIDUAL PERCENTAGE is displayed. If an amount is not entered and a RESIDUAL PERCENTAGE is entered, the RESIDUAL amount is calculated and displayed using the following:

ACQUISITION COST * RESIDUAL PERCENTAGE

• INTERIM RENT
  Enter anticipated interim rent, if applicable.
  
  
• INSURANCE PREMIUM
  Enter insurance premium to be paid to broker, if applicable.
  
  
• NOTARY FEE
  Enter notary fee paid to broker, if applicable.
  
  
• VENDOR SUBSIDY
  Enter vendor subsidy, if applicable. The name of this receivable may be customized as desired.
  
  
• ACCRUAL METHOD
  Enter the method by which income should be accrued. Precomputed income accrual methods and two simple interest methods are allowed. Possible accrual methods are:
  
  
  • AAPR or RAPR
    This method indicates a level or constant yield income accrual (the FASB method of income recognition) with payments due in advance (AAPR) or arrears (RAPR).
    
    
  • AADA or RADA
    This method indicates a level yield accrual method with payments due in advance (AADA) or arrears (RADA).
    
    
  • AR78 or RR78
    This method indicates a Rule of 12/78ths income accrual with payments due in advance (AR78) or arrears (RR78).
    
    
  • AH78 or RH78
    This method indicates a Rule of 12/78ths Half Month Convention income accrual with payments due in advance (AH78) or arrears (RH78).
    
    
  • ASTR or RSTR
    This method indicates a straight line income accrual with payments due in advance (ASTR) or arrears (RSTR).
    
    
  • AOSL or ROSL
    This method indicates an operating straight-line accrual method with payments due in advance (AOSL) or arrears (ROSL).
    
    
  • RAX
    This method indicates an interest bearing accrual method - principal and interest - fixed rate, with payments due in arrears.
    
    
  • VV and OV
    a simple interest accrual type with variable payments, a variable principal, floating rates and principal plus interest in advance (AOVE) or arrears (ROVE).
    
    
• ITC CODE/METHOD
  Enter the Investment Tax Credit (ITC) method for the lease. If ITC is taken for the lease, the ITC calculated for the asset (as well as the ITC recapture, if applicable) is included in the ANNUAL PRE-TAX YIELD calculation and is amortized for book purposes in the Model Amortization schedule. If the ITC should not be included, use the ITC methods of BYPS or PASS. Valid ITC methods are:
  
  
  • BYPS Bypass indicates that ITC is not taken for this asset. The net effect between BYPS and PASS is the same for the purposes of the Model Amortization report.
    
    
  • PASS Pass-through indicates that ITC is not taken for this asset. The net effect between PASS and BYPS is the same for the purposes of the Model Amortization report.
    
    
  • TK The full amount of ITC available is taken in the first year. LeasePak automatically takes 6% if the depreciable life is 3 years or 10% if the depreciable life is greater than 3 years.
    
    
  • TK2 The full amount of ITC available is taken at two percent per year for tax purposes. LeasePak shows the amount of ITC to claim as 2% each year for three years if the depreciable life is 3 years or 2% each year for five years if the depreciable life is greater than 3 years.
    
    
  • TR A reduced amount of ITC is taken in the first year. LeasePak automatically takes 4% if the depreciable life is 3 years or 8% if the depreciable life is greater than 3 years. A reduced amount of ITC should be taken only if the depreciation method is ACRS.
    
    
  • TR2 A reduced amount of ITC is taken at two percent per year for tax purposes. LeasePak shows the amount of ITC to claim as 2% each year for two years if the depreciable life is 3 years or 2% each year for four years if the depreciable life is greater than 3 years. A reduced amount of ITC should be taken only if the depreciation method is ACRS.
    
    
• DEPRECIATION METHOD
  Enter the method of depreciation for the asset. Press HELP for a list of valid depreciation methods. The third and fourth characters in the method indicate the depreciable life of the asset.
  
  
• PORTFOLIO
  Enter the number of the portfolio whose parameters should be used for the model. Press HELP for a list of valid portfolios. Parameters at the portfolio level which are used by the model are:

  INITIAL DIRECT COST EXCLUDED FROM YIELD
  Refer to the first screen of the New Lease Customizations option of the Portfolio update [U0212] for more information on this parameter.

  INVESTMENT TAX CREDIT EXCLUDED FROM YIELD
  Refer to the first screen of the New Lease Customizations option of the Portfolio update [U0212] for more information on this parameter.

  PRORATE INCOME
  Refer to the first screen of the New Lease Customizations option of the Portfolio update [U0212] for more information on this parameter.

  TAX RATE %
  Refer to the second screen of the Miscellaneous Customizations option of the Portfolio update [U0212] for more information on this parameter.

  VENDOR PARTICIPATES IN THE INCOME
  Refer to the first screen of the New Lease Customizations option of the Portfolio update [U0212] for more information on this parameter.

• ANNUAL PRE-TAX YIELD
  Enter the desired gross annual pre-tax yield. LeasePak calculates the payment amount which returns the desired yield if an ANNUAL PRE-TAX YIELD is entered and the payment amount is left blank. If a payment amount is entered and the ANNUAL PRE-TAX YIELD is left blank, LeasePak calculates and displays the ANNUAL PRE-TAX YIELD. If both a yield and a payment amount are entered, LeasePak verifies the yield entered. For more information on how LeasePak calculates the ANNUAL PRE-TAX YIELD and the payment amount, refer to the NOTES section.
  
  
• RESIDUAL PERCENTAGE
  Enter the residual percentage for the lease if a RESIDUAL amount is not entered. If a RESIDUAL PERCENTAGE is entered, the RESIDUAL dollar amount is calculated and displayed. If a RESIDUAL dollar amount is entered, the RESIDUAL PERCENTAGE is calculated as follows:

  RESIDUAL / ACQUISITION COST

• COMMENCEMENT DATE
  Enter the starting date of the lease using a MM/DD/YY or DD/MM/YY format, depending on the Date Format Preference field in Security [U0706]. The month and year of this date are used to print the date for each period on the Model Amortization report (the day portion is not used). Never leave COMMENCEMENT DATE blank. If a date is unknown or not important, use any desired date (e.g., the current date).
  
  
• REGISTRATION FEE
  Enter the registration fee, if applicable. The name of this receivable may be customized as desired.
  
  
• INSURANCE FEE
  If an Insurance Premium was entered, an Insurance Fee will display, based on the percentage entered for the portfolio.
  
  
• OPEN COMMISSION
  Enter the opening commission, if applicable. The name of this receivable may be customized as desired.
  
  
• DOCUMENTATION FEE
  Enter the documentation fee, if applicable.
  
  
• PAYMENT SCHEDULE
  The payment schedule consists of three components: the number of payments, the frequency of those payments (e.g., monthly, quarterly, etc.), and the payment amount. For example:
  
  

  PAYMENT SCHEDULE:	NUMBER	FREQUENCY	AMOUNT
  1 - 36	36	MON	335.44
  37			.00

To have LeasePak calculate the payment amount, enter the ANNUAL PRE- TAX YIELD, the number of payments, and the payment frequency. All payment amounts should be zero. For example:

PAYMENT SCHEDULE:	NUMBER	FREQUENCY	AMOUNT
1 - 36	36	MON	.00
37			.00

Up to 360 different payment schedules for the same lease may be entered. A step payment would be entered as:

PAYMENT SCHEDULE:	NUMBER	FREQUENCY	AMOUNT
1 - 12	12	MON	200.00
13 - 24	12	MON	300.00
25 - 36	12	MON	550.00

The current number of payments for each number, frequency, and amount line of the payment schedule is displayed. This information is useful when entering multiple payment schedule information for a lease.

• NUMBER (scrolled area)
  Enter the number of payments.
  
  
• FREQUENCY (scrolled area)
  Enter the frequency of the payments. Valid payment frequencies are:

MON Payments are due monthly (12 payments per year).

QTR Payments are due quarterly (4 payments per year).

SEMI Payments are due semi-annually (2 payments per year).

ANNL Payments are due annually (1 payment per year).

SKIP Payment is skipped for the month(s) indicated (lease payment not due). A payment AMOUNT may not be entered with the ‘SKIP’ FREQUENCY code. Here is an example of a payment schedule with ‘SKIP’ months:

PAYMENT SCHEDULE:	NUMBER	FREQUENCY	AMOUNT
1 - 9	9	MON	100.00
10 - 12	3	SKIP	.00
13 - 21	9	MON	100.00
22 - 24	3	SKIP	.00

ADVM Monthly payment is due in advance. Any payment in the schedule may be specified to be an advance payment. For instance, if the first and last payments are due in advance, enter:

PAYMENT SCHEDULE:	NUMBER	FREQUENCY	AMOUNT
1	1	ADVM	100.00
2 - 59	58	MON	100.00
60	1	ADVM	100.00

LeasePak automatically assumes that the first payment is in advance if the lessor accrual method (ACCRUAL LESSOR) indicates an advance lease (the first character of the accrual method is an ‘A’, as in ‘AAPR’ or ‘ASTR’). So the above payment schedule could also be entered as:

PAYMENT SCHEDULE:	NUMBER	FREQUENCY	AMOUNT
1 - 59	59	MON	100.00
60	1	ADVM	100.00

Since any payment in the schedule can be specified as an advance payment, the first, twelfth, and twenty-fourth payments are advance payments with the following schedule:

PAYMENT SCHEDULE:	NUMBER	FREQUENCY	AMOUNT
1 - 11	11	MON	100.00
12	1	ADVM	100.00
13 - 23	11	MON	100.00
24	1	ADVM	100.00

ADVQ Quarterly payment is due in advance.

ADVS Semi-annual payment is due in advance.

ADVA Annual payment is due in advance.

• AMOUNT (scrolled area)
  Enter the amount of the payment. Do not include the use tax in the payment. To have LeasePak calculate the payment amount, enter the ANNUAL PRE- TAX YIELD, the NUMBER of payments, and the FREQUENCY, and leave AMOUNT blank. For more information on how LeasePak calculates the payment amount and the annual pre-tax yield, refer to the NOTES section.

Amortization Input (Vehicle Finance)

When the Vehicle Finance module is purchased, this screen appears. Allowing the user to enter IDC/IDR information when a valid accrual method is entered.

These fields may be customized in the Assessment Customizations option of the Portfolio update [U0212].

The fifty-three additional G/L accounts that have been added in LeasePak UX v3.1a track receivables, fees, expenses, debits and credits. All G/L accounts can be reconciled via the Lease Inquiry [R0905]. Specific accounts may reconciled via the G/L Reconciliation [R0403], G/L Entries Listing [R0406]and the Master G/L Reconciliation [U0460] reports. Refer to General Ledger Accounting for detailed information.

Leases with Operating type accrual methods will be amortized with straight line methods. All other accrual methods, will be amortized with a proportional income basis method. However, IDRC-Warranty Insurance will use only straight line methods.

Leases that are with precomputed methods will use a straight line amortization schedule when the following applies:

If the Sum of Payment Schedule - Total Contract Acquisition Cost = (+/ -) 0.99

Leases that have IBL type accrual methods must have the Estimated Unearned income manually entered into the L_EST_UE_D field in the RAP or the RLS tables in order to calculate the earned IDC/IDR:

New Earned IDC/IDR: ((Lessor Rental Income Y-T-D/Estimated Unearned) *Original IDC/IDR) - IDC/IDR Y-T-D

If there is nothing entered in these fields, LeasePak will calculate the Estimated Unearned as follows:

Estimated Unearned = Minimum Payments Receivable - Total Contract Acquisition Cost

The Total Contract Acquisition Cost is calculated as follows:

+ Unguaranteed Residual
- (Acquisition Cost - Down Payment)
- Other Charges

Minimum Lease Payments Receivable is calculated as follows:

Number of Payments * payment amount (according to payment schedule)

+ Guaranteed Residual
+ Interim Rent (when Interim Rent is set to N in [U0212NL])

If the yield/rate (Total Interest Rate) is zero, a straight line amortization method will be used for IBL’s.

Note: The INCLUDE IDC IN ‘NPV’ and ‘OPR’ PAYOFFS’ switch in the Payoff Customizations option of the Portfolio [U0212] update have no affect on the new IDC/IDR fields.

Enhanced IDC/IDR, supports the following accrual methods when only one asset is tied to the lease:

xAPR

xAXx

xOPM

xOSL

• FIXED RATE RESERVES
  Enter the IDC3- Fixed Rate Reserve total amount for the lease.
  
  
• STANDARD RESERVES
  Enter the IDC4 - Standard Reserve total amount for the lease.
  
  
• GUARANTEED RESERVES
  Enter the IDC5 - Guaranteed Reserves total amount for the lease.
  
  
• SUBVENTION
  Enter the total IDR5 - Subvention amount for the lease.
  
  
• DEALER BUY DOWN
  Enter the total IDR6 - Dealer Buy Down amount for the lease.
  
  
• CREDIT LIFE INSURANCE 1
  Enter the total IDR7 - Credit Life Insurance 1 amount for the lease.
  
  
• CREDIT LIFE INSURANCE 2
  Enter the total IDR8 - Credit Life Insurance 2 amount for the lease.
  
  
• CR DISIBILITY INS 1
  Enter the total IDR9 - Credit Disability 1 amount for the lease.
  
  
• CR DISABILITY INS 2
  Enter the total IDRA - Credit Disability Insurance 2 amount for the lease.
  
  
• ACQUISITION FEE
  Enter the total IDRB -Acquisition Fee amount for the lease.
  
  
• WARRANTY FEE
  Enter the total IDRC - Warranty Insurance Fee amount for the lease.

 

Report Options

• Select option and press RETURN
  Enter the letter corresponding to the report option desired. Then press RETURN to continue.
  
  

  A RETURN TO THE MENU
  This option terminates the Model Amortization report and returns to the Strategic Management report section menu [R01].
  
  

  B CHANGE LEASE INFORMATION
  This option returns to screen 1 of this report and enables adjustments to be made to any or all of the information entered.

  C CLEAR LEASE INFORMATION
  This option returns to screen 1 of this report and clears all information entered, effectively allowing entry of all new information for the model.

  D LEASE INFORMATION LISTING
  This option produces a report of calculations based upon the information entered.

  E AMORTIZATION LISTING
  This option produces the LEASE INFORMATION LISTING and a report detailing the amortization of the lease.

Participation

• ACCRUAL METHOD
  Enter the income accrual method for the participant. If there is no participant in the income, leave both fields blank. If the accrual method for the lease is AAPR or RAPR, the accrual method for the participant should be the same.
  
  
• RATE FACTOR
  Enter the portion of the lease income which is due the participant. The total amount of income for the participant is calculated as follows and is accrued proportionally with the lessor income:

  (CAPITALIZED COST + RESIDUAL) * RATE FACTOR * TERM

   

Lease Information Listing

This report recaps all the initial lease information entered on the selection screens and also displays calculated information. It is segregated into five sections:

• LEASE INFORMATION
  A recap of the lease information, as entered during the selection process, is displayed. This information may be used as a reference for the calculations produced by the model.

  Note: The number of payments is displayed for each payment schedule line. Implied advance payments are automatically split out from the entered payment schedule. That is, if the accrual method used indicates that payments are due in advance (i.e., the accrual method starts with an ‘A’), and a single payment schedule line is entered, the advance payment is specifically shown. For example:

  Entered payment schedule:

  PAYMENT SCHEDULE:	NUMBER	FREQUENCY	AMOUNT
  1 - 60	_60	MON	100.00
  61			.00

  Displayed payment schedule:

  PAYMENT SCHEDULE:	NUMBER	FREQUENCY	AMOUNT
  1	1	ADVM	100.00
  2 - 59	59	MON	100.00

• PARTICIPANT INFORMATION
  A recap of the participant information, as entered during the selection process, is displayed. This information may be used as a reference for the calculations produced by the model.
  
  
• FLOATING RATE INFORMATION
  A recap of floating rates, as entered during the selection process, is displayed. This information may be used as a reference for the calculations produced by the model.
  
  
• TAX AND YIELD INFORMATION
  Tax rate, depreciation tax basis and Investment Tax Credit amounts are displayed. The tax rate is parameter information, while the depreciation tax basis and the ITC amounts are calculated values. This information may be used as a reference for the calculations produced by the model.

  TAX RATE
  The tax rate of the portfolio is displayed. The tax rate is used to determine pre-tax values of ITC and the security deposit for yield calculations. It may be changed using the second screen of the Miscellaneous Customizations option of the Portfolio update [U0212].

  DEPRECIATN TAX BASIS
  The tax basis for depreciation is displayed. The tax basis is the acquisition cost of the asset and is automatically reduced by one-half of the Investment Tax Credit if the full amount of ITC available is taken. For example, if the acquisition cost of an asset, with a depreciable life of 5 years, is $100,000.00 and the full amount of ITC is taken ($10,000.00), the federal depreciation tax basis of the asset is $95,000.00.

  ITC
  The amount of Investment Tax Credit taken is displayed. Refer to the Tax Consideration document for more information about Investment Tax Credit.

• ACCRUAL INFORMATION
  Key lease calculations and information are displayed. All information in this section, except for the participant rate, is calculated. This information may be used as a reference for the calculations produced by the model.

  CONTRACT RECEIVABLE
  The original contract receivable for the lease is displayed. Original contract receivable is the sum of all scheduled lease payments, including all advance payments.

  ORIGINAL NET INVEST
  The starting net investment for the lease is displayed. This value is already reduced by the amount of all the advance payments. For example:

  STARTING CAPITALIZED COST	= $10,000.00
  PAYMENT SCHEDULE	= $350.00 FOR 36 MONTHS (FIRST AND LAST IN ADVANCE)
  ORIGINAL NET INVESTMENT	= 9,300.00

  LESSOR UNEARNE
  The original lessor unearned is displayed. This is the total amount of lessor income to be earned over the life of the lease.

  PARTICIPANT UNEARNED
  The original participant unearned is displayed. This is the total amount of participant (e.g., vendor, investor) income to be earned over the life of the lease.

  ITC UNEARNED
  The original Investment Tax Credit unearned is displayed. ITC UNEARNED is not accrued if the ITC method is ‘bypass’ or ‘pass through’.

  RENTAL INCOME
  The average monthly rental income is calculated and displayed. Refer to the LeasePak Calculations document for more information on this calculation.

  RENTAL DEPRECIATION
  The average monthly rental depreciation is calculated and displayed. Refer to the LeasePak Calculations document for more information on this calculation.

  LEASE TERM
  The term of the lease (in months), based upon the payment schedule entered, is displayed.

  MATURITY DATE
  The maturity date of the lease, based upon the term and commencement date, is displayed.

  LESSOR YIELD
  The lessor’s internal rate of return (IRR) in the lease is calculated and displayed.

  PARTICIPANT YIELD
  The participant’s yield in the lease, if applicable, is calculated and displayed. A participant yield is calculated if a participant rate was entered.

  LESSOR RATE
  The lessor’s rate is calculated and displayed. The lessor rate plus the participant rate is the ‘contract rate’ of the lease. Refer to the LeasePak Calculations document for more information on the calculation of ‘contract rate’.

  PARTICIPANT RATE
  The participant’s rate, if applicable, is displayed. The participant rate plus the lessor is the ‘contract rate’ of the lease. Refer to the LeasePak Calculations document for more information on the calculation of ‘contract rate’.

   

Model Amortization

The report shows the amortization schedule and tax benefits for the lease.

• MONTH ENDING
  The period, starting with the commencement date and ending at the lease maturity, is displayed in MM/DD/YY or DD/MM/YY format, depending on the Date Format Preference field in Security [U0706]. This date represents the accrual date, rather than the payment due date. For example, a line beginning with a date of ‘10/86’ shows the accrual information as of the end of the month of October, 1986. Since accruals are in advance, the payment amount shown is actually due in November, 1986. Also notice that the first line of the report is labeled ‘BOOK’. This is the original booking, or starting, information of the lease.
  
  
• DEPRECIATED BOOK VALUE
  The depreciated value of the lease is displayed. DEPRECIATED BOOK VALUE is calculated by subtracting the monthly depreciation amount (found in the column labeled DEPR) from the previous month’s DEPRECIATED BOOK VALUE. If depreciation is bypassed, the DEPRECIATED BOOK VALUE does not change from its original value.
  
  Only the full dollar amounts are displayed.
  
  
• REMAINING NET INVESTMENT
  The remaining net investment of the lease is displayed. REMAINING NET INVESTMENT is calculated by subtracting the PRINCIPAL PAYMENT from the previous month’s REMAINING NET INVESTMENT and is the amount that is used to calculate the next month’s income.
  
  
• PRINCIPAL PAYMENT
  The reduction of net investment for each period is displayed. PRINCIPAL PAYMENT is calculated by subtracting the total income earned (lessor, ITC, and participant) from the TOTAL NET PAYMENT. The total income earned calculation is based upon the accrual method selected.
  
  
• INCOME LESSOR
  The income earned for the lessor for each period is displayed.
  
  
• INCOME PARTICIPANT
  Income earned for the participant, if any, for each period is displayed.
  
  
• IDC
  The initial direct cost (IDC) amortized for each period is displayed.
  
  
• INCOME ITC
  The book ITC income earned for each period is displayed. This amount is not calculated if ITC is bypass or pass through.
  
  
• TOTAL NET PAYMENT
  Total net lease payment, not including sales/use tax, is displayed.
  
  
• MTH DUE
  The month due for each payment listed is displayed.
  
  
• ITC/DEPR
  Each month’s depreciation for tax purposes is displayed. If ITC is earned, the ITC amount is added to the depreciation amount. If ITC is bypassed or passed through, the ITC amount is zero. If depreciation is bypassed, the depreciation amount is zero.
  
  
• PRE-TAX CASH FLOW INCLUD TAX BENEFITS
  The cash flow is calculated as follows:

  TOTAL NET PAYMENT
  + PRE-TAX ITC
  + DEPRECIATION

  Pre-tax ITC is calculated by dividing the ITC by (1 - tax rate of the portfolio).

• INS PREM
  The amortized value of the insurance premium cost is displayed.
  
  
• INS FEE
  Revenue for insurance fee amortized for each period is displayed.
  
  
• REGISTRATION FEE
  Revenue for registration fee amortized for each period is displayed.
  
  
• NOTARY FEE
  The initial direct cost for notary fee amortized for each period is displayed.
  
  
• DEALER SUBSIDY
  The initial direct cost for vendor/dealer subsidy amortized for each period is displayed.
  
  
• OPENING COMMISSSION
  The initial direct cost for opening commission amortized for each period is displayed.
  
  
• TOTALS
  Lease totals for principal payment, income lessor, income ITC, income participant, total net payment, ITC, depreciation, insurance premium, insurance fee, registration fee, notary fee, vendor subsidy, opening commission and pre-tax cash flow including tax benefits are shown.

Calculations

The annual pre-tax yield is calculated as follows:

• Determine the pre-tax yield as follows:

  PRE-TAX VALUE OF THE ITC
  + PRE-TAX VALUE OF THE SECURITY DEPOSIT
  + ADVANCED PAYMENT(S)
  - ACQUISITION COSTS
  - INITIAL DIRECT COSTS

A negative amount indicates a cash outflow. A positive amount indicates a cash inflow. The pre-tax value is calculated by dividing the after-tax value by (1 - tax rate). The tax rate may be modified through the Miscellaneous Customizations option of the Portfolio update [U0212].

• Determine the cash inflow at the end of the lease as follows:

  RESIDUAL
  - PRE-TAX VALUE OF THE SECURITY DEPOSIT
  - PRE-TAX VALUE OF THE ITC RECAPTURE

  The amount of the Investment Tax Credit recapture is based upon the amount and method of ITC taken, if any, and the term of the lease. The model assumes that the asset is sold at the end of the term. For example, if a lease with a payment schedule spanning 48 months claimed 10% ITC, the 2% is automatically recaptured for the purposes of this report.

• Set up a cash flow array and calculate the internal rate of return.

The payment amount is calculated as follows:

• Determine the present value of the net residual value. The net residual value is calculated as follows:

  RESIDUAL
  - PRE-TAX VALUE OF THE SECURITY DEPOSIT
  - PRE-TAX VALUE OF THE ITC RECAPTURE

• Determine the pre-tax net outflow at the inception of the lease, including the present value of the residual as follows:

  PRE-TAX VALUE OF THE ITC
  + PRE-TAX VALUE OF THE SECURITY DEPOSIT
  + PRE-TAX VALUE OF THE NET RESIDUAL VALUE
  - ACQUISITION COST
  - INITIAL DIRECT COSTS

• Determine the net present value of the payment stream.
  
  
• Calculate the lease rate factor as follows:

  1 / NET PRESENT VALUE OF THE PAYMENT STREAM.

• Determine the monthly lease payment as follows:

  PRE-TAX NET OUTFLOW * LEASE RATE FACTOR

   

Vehicle Finance - Output Mode

The Model Amortization report [R0109] has been modified to allow users to run an amortization based on a lease number for specified accrual methods. When the Vehicle Finance module is purchased, the user will have the option to send the report output as a letter.

This screen is used to select the view in which the report will display the payment history for the lease selected.

• COMPANY (M) OR CUSTOMER (S) OUTPUT
  Enter ‘M’ for Company mode to be displayed, or enter ‘S’ for the Customer mode to be displayed. The LeasePak default value is ‘M’.

  The Company (M) mode will display all pertinent information regarding the trace information and transaction details of the lease. The Company report is intended for in-house use.

  The Customer (S) mode will only display the account past history and assumed receipts for future payments. The report displays payment number, due date, payment amount, principal, interest, balance and other charges. The Customer report is intended to be viewed by the customer.

• SEND THE OUTPUT AS LETTER Y/N
  This option is available with the purchase of the Vehicle Finance module. Select ‘Y’ for the report to send the output file to the letter module. The LeasePak default value is ‘N’, this will not send the output file as a letter.

Vehicle Finance - Model Amortization Report, Company Format

The Company format captures the initial lease information entered on the selection screen and also displays calculation information. The report also shows the amortization schedule and tax information for the lease.

• LEASE INFORMATION
  A recap of the lease information, as entered during the selection process, is displayed. This information may be used as a reference for the calculations produced by the model.


Note: The number of payments is displayed for each payment schedule line. Implied advance payments are automatically split out from the entered payment schedule. That is, if the accrual method used indicates that payments are due in advance (i.e., the accrual method starts with an ‘A’), and a single payment schedule line is entered, the advance payment is specifically shown. For example:

 

Entered payment schedule:



PAYMENT SCHEDULE:	NUMBER	FREQUENCY	AMOUNT
1 - 60	_60	MON	100.00
61			.00

Displayed payment schedule:

PAYMENT SCHEDULE:	NUMBER	FREQUENCY	AMOUNT
1	1	ADVM	100.00
2 - 59	59	MON	100.00

• PARTICIPANT INFORMATION
  A recap of the participant information, as entered during the selection process, is displayed. This information may be used as a reference for the calculations produced by the model.
  
  
• FLOATING RATE INFORMATION
  A recap of floating rates, as entered during the selection process, is displayed. This information may be used as a reference for the calculations produced by the model.
  
  
• TAX AND YIELD INFORMATION
  Tax rate, depreciation tax basis and Investment Tax Credit amounts are displayed. The tax rate is parameter information, while the depreciation tax basis and the ITC amounts are calculated values. This information may be used as a reference for the calculations produced by the model.
  

  TAX RATE
  The tax rate of the portfolio is displayed. The tax rate is used to determine pre-tax values of ITC and the security deposit for yield calculations. It may be changed using the second screen of the Miscellaneous Customizations option of the Portfolio update [U0212].

  DEPRECIATN TAX BASIS
  The tax basis for depreciation is displayed. The tax basis is the acquisition cost of the asset and is automatically reduced by one-half of the Investment Tax Credit if the full amount of ITC available is taken. For example, if the acquisition cost of an asset, with a depreciable life of 5 years, is $100,000.00 and the full amount of ITC is taken ($10,000.00), the federal depreciation tax basis of the asset is $95,000.00.

  ITC
  The amount of Investment Tax Credit taken is displayed. Refer to the Tax Consideration document for more information about Investment Tax Credit.

• ACCRUAL INFORMATION
  Key lease calculations and information are displayed. All information in this section, except for the participant rate, is calculated. This information may be used as a reference for the calculations produced by the model.

  CONTRACT RECEIVABLE
  The original contract receivable for the lease is displayed. Original contract receivable is the sum of all scheduled lease payments, including all advance payments.

  ORIGINAL NET INVEST
  The starting net investment for the lease is displayed. This value is already reduced by the amount of all the advance payments. For example:

  STARTING CAPITALIZED COST = $10,000.00
  PAYMENT SCHEDULE = $350.00 FOR 36 MONTHS
  (FIRST AND LAST IN ADVANCE)
  ORIGINAL NET INVESTMENT = 9,300.00

  LESSOR UNEARNE
  The original lessor unearned is displayed. This is the total amount of lessor income to be earned over the life of the lease.

  PARTICIPANT UNEARNED
  The original participant unearned is displayed. This is the total amount of participant (e.g., vendor, investor) income to be earned over the life of the lease.

  ITC UNEARNED
  The original Investment Tax Credit unearned is displayed. ITC UNEARNED is not accrued if the ITC method is ‘bypass’ or ‘pass through’.

  RENTAL INCOME
  The average monthly rental income is calculated and displayed. Refer to the LeasePak Calculations document for more information on this calculation.

  RENTAL DEPRECIATION
  The average monthly rental depreciation is calculated and displayed. Refer to the LeasePak Calculations document for more information on this calculation.

  LEASE TERM
  The term of the lease (in months), based upon the payment schedule entered, is displayed.

  MATURITY DATE
  The maturity date of the lease, based upon the term and commencement date, is displayed.

  LESSOR YIELD

  The lessor’s internal rate of return (IRR) in the lease is calculated and displayed.

  PARTICIPANT YIELD
  The participant’s yield in the lease, if applicable, is calculated and displayed. A participant yield is calculated if a participant rate was entered.

  LESSOR RATE
  The lessor’s rate is calculated and displayed. The lessor rate plus the participant rate is the ‘contract rate’ of the lease. Refer to the LeasePak Calculations document for more information on the calculation of ‘contract rate’.

  PARTICIPANT RATE
  The participant’s rate, if applicable, is displayed. The participant rate plus the lessor is the ‘contract rate’ of the lease. Refer to the LeasePak Calculations document for more information on the calculation of ‘contract rate’.

Vehicle Finance - Model Amortization Report, Customer Format

The Customer format captures the account past history and assumed receipts for future payments. The report displays payment number, due date, payment amount, principal, interest, balance, and other charges.

For an RAX lease, the report generated will consist of actual principal and interest payments from the commencement through the current payment and model the future payments. For a non RAX lease, the report generated will assume all historical payments have been made and model the future payments.

© 2001 by McCue Systems Incorporated.
All rights reserved.

The information contained in this document is the property of McCue Systems, Inc. Use of the information contained herein is restricted. Conditions of use are subject to change without notice. McCue Systems, Inc. assumes no liability for any inaccuracy that may appear in this document; the contents of this document do not constitute a promise or warranty. The software described in this document is furnished under license and may be used or copied only in accordance with the terms of said license. Unauthorized use, alteration, or reproduction of this document without the written consent of McCue Systems, Inc. is prohibited.