How to calculate equipment rental

When choosing equipment to lease to the paramount role played by the cost. Rental equipment can last one hour, maybe a year, but in any case the tenant does not have to invest a large sum of money, otherwise it would be more profitable to purchase the equipment in the property. When selecting organizations, offering their services for rent, the tenant ordinarily ends the choice, guided by the principles of cost minimization.

You will need

The lease of the equipment.

Instruction

To calculate equipment rental for a period of one year, to the annual amount of depreciation on the full restoration of the equipment to the lease multiplied by the percentage that represents the profit margin from rental property. The lease percentage is usually set at 10%. The resulting amount is divided by 100 and it, again, with the annual amount of depreciation.

To calculate the amount of depreciation required by multiplying the book value of the leased equipment at the rate of depreciation determined in accordance with the classification of fixed assets. The carrying value is determined according to the accounting documents, and in the absence of the documents engage an independent appraiser. The resulting amount must be divided by 100.

Appraisers often calculate the amount of rent for the equipment by multiplying the market value of the equipment or the residual value on the balance sheet at the capitalization rate or the rate projected annual inflation rate. Then to this amount is added the cost of the leased equipment.

The amount of rent must not be lower than the cost of taxes, fees and any other payments to the budget, as well as depreciation. The rent is charged should be made on the date of delivery to the lessee of equipment under an act of transfer and acceptance and the date when the contract will expire or will be terminated.

The tenant needs to reflect in accounting the rented equipment and as an asset and as an obligation to the smallest evaluation at the beginning of the lease term. Costs of the lessee to improve the leased equipment, for example, modernization and reconstruction, leads to an increase in future economic benefits, although they were originally expected from its usage, and should they be reflected as capital investment in construction other non-current assets.

The lessor reflects the equipment as a receivable in the amount of unguaranteed salvage value net financial income, and the amount of the minimum lease payments.

Note

All costs that had to be incurred by tenant, including repair, maintenance and operation should not be included in the rent.

Useful advice

All proceeds associated with rental equipment are taxed and recorded in the accounting records.

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