Release Notes 8.90
April 2006
Fees
Single fees now offer a new checkbox Lessee obligation; when it is checked, further checkboxes appear for financed and in FASMinimum Lease Payments. These specify, respectively, whether the fee is financed by the lessor and collected not as a cash item but rather as part of the rents, and whether the fee is to be included in the lessee’s MLP for the present value FAS 13 test.
A new checkbox Equity/Capital (in transaction % basis) allows you to specify whether the fee is included as part of the lessor’s equity in the transaction, and therefore also as part of the basis for calculating other items expressed as %.
Each fee now includes combination boxes for specifying its accounting treatment for capital (DFL) and operating lease treatment.
Capitalized fee in the asset screen has been renamed sales tax. The transaction basis is now the sum of assets, lending loans, sales tax, and equity/capital fees. Capitalized continues to be a selection for tax amortization method (federal and state).
Dependent fees can now be based on book income. There are now 14 activities and 10 balances that you can base these on. Further, start & end dates and periodicity can be selected for each dependent fee.
Summary Screens
Summary screens for Assets, Rents, Loans, Subsidies, and Fees are available when more than one of a particular item exists. You can activate or de-activate individual items from the summary screen, as well as change some values. From the summary screen, you can zoom to a screen by right-clicking over the respective line, or by selecting that line and clicking zoom.
Association
Elements of a transaction, including rents, fees, borrowing loans, periodic expenses and periodic income, can be associated with assets, lending loans, or both. The asset (or loan) will represent the basis for the calculation of the dollar amount of that associated element if entered as a %, and it will be activated and de-activated together with its associated base, if one has been specified. If the element is associated with all assets, it will be associated with all active assets.
Residual Guarantees
New automatic calculations of residual guarantees have been implemented to achieve specific FAS classifications. Within the Parameters – IRS /FAS Treatment screen, a checkbox Automatically Calculate activates 2 selections: 1) maximum for lessee operating lease, and 2) minimum for lessor capital lease.
If the first is selected, one or more of the assets in the transaction must have a lessee guarantee. The lessee guarantee(s) will be recalculated so that the lessee PV of the minimum lease payments is slightly under the FAS 13 threshold, entitling the lessee to use operating lease accounting.
If the second is selected, one or more of the assets in the transaction must have a lessee or a third-party guarantee. The guarantee(s) will be recalculated so that the lessor PV of the minimum lease payments is slightly over the FAS 13 threshold, allowing the lessor to use capital lease accounting.
A new type of residual guarantee, Split- TRAC , is available under Parameters – Assets – Residual Guarantee. This allows you to model a lessee guarantee less than the full economic residual, yet still consider the transaction a TRAC lease.
Statistics
A new measure, customer rate, is available in the Controls - Statistics – Payments screen. It includes rent, interim rent, lessee fees, sales tax, guaranteed residual or balloon, periodic income, security deposits, and advertised subsidies. A new item in that same screen allows you to specify the compounding periodicity for these (lessee-oriented) payment rates.
A new function, Export Statistics to Templates, is available under the Controls – Statistics screen. It is similar to import statistics, but with the opposite “direction.” It lets you specify a folder (optionally with subfolders), and all templates will be loaded with the statistics from the current parameter file. It allows you to select any or all of the 5 areas (Miscellaneous, Payment Rates, Present Values, Totals, and Yields) to copy.
A new measure Implicit Interest Rate, Book is available in the Controls – Miscellaneous screen, together with checkboxes to specify whether periodic income and subsidies are included. It is compounded monthly in addition to the transaction periodicity, and it is based on lease and loan components, in contrast to the regular IIR, which is based on the lease only (and uses the rent periodicity).
Yields and Present Values
A number of enhancements have been made to yields. First, you are not limited to 6 yields. To add one, simply click “insert” and the selected yield will be duplicated in the list. To remove a yield, select it and click “delete”. A new compounding periodicity is available for yields and PVs: periodic/max 30 days. It is the same as daily/periodic, except that it compounds at a minimum once every 30 days.
A new custom yield is available: book pre-tax net cash flow return. It has a proof report in the Yield ROE report group. Many new arrays are available. Among them are: cash flows without loan borrowings (PT & AT), ATCF [assets; rents; loans] (full term and EBO), ATCF without subsidy, PTCF without dependent fees (full term and EBO). We offer a new spread index method: fixed: average layered, and a new method for the base of a spread yield: full term rate with residual.
Subsidies
Subsidies can now be identified as blind, if they are not to be included in lessee rates. A new checkbox Include subsidies in IIR has been implemented in Controls - Statistics – Miscellaneous screen. Subsidies can now be used in lender mode, referring to loan amount. In both mode, the subsidy refers to both assets and loans. In such a case, however, only the portion applicable to the lease is used in the implicit interest rate.
FAS 13 Tests
The title transfer is now included in the FAS classification tests, reflecting a new checkbox Title transfers to lessee at end of lease in Controls – FAS Classification. The FMV rather than the economic residual is used in the FAS 90% lessor test and in the Implicit Interest Rate. In the FAS classification report, in the last quarter test, we now use the lease commencement date instead of the in-service date. The economic life, last quarter, bargain purchase, and title transfer tests have been implemented in Lease-vs.-Purchase mode.
Reports
Functions relating to printing and editing reports formerly under the File menu have been moved to a new selection Report under the main command menu. Upon printing a report on your screen, 4 icons show at the top left of the report to allow you to send a copy to the printer, to Excel, to the clipboard, and Adobe Acrobat (PDF format). The function of the former calculate icon in the toolbar has been changed to print the summary report to your screen. The accounting section of the Summary Report has been reorganized into 2 columns, one on the left for AccountingTreatment and the other on the right for FAS Classification.
In the lessee guarantee report, the protected value formerly was always the TV. A new selection allows the protected value to be based on the full term rate with residual. Also, that report has been moved to the FAS group.
A new portfolio ROE proof report shows the blended money cost. A new statistic in the summary report is the average lease rate factor. A new report function exponent is available in the report editor.
Accounting
We have added several new accounting methods, IRR Amortization with residual accretion among them. We have also developed asset based accounting which uses multiple allocation factors to allow for more granular reporting.
Cash Flow Screen
The right-click option within loan-type screens add residual as funding depends on conditional sale status. The options are yes, no, and for CSA only . A new right-click option on loan fundings is split into multiple fundings. New right-click options on cash-flow amount field are Annual lease rate & annual real estate.
Depreciation
When switching a depreciation or amortization method to one of the specified methods (annual or daily, % or dollar), you are now prompted to load the values from the previous method. References to ADR ( Asset Depreciation Range ) have been updated to ADS (Alternative Depreciation System).
TV/EBO
The control % taxable has been moved from Controls - TV/SLV to Parameters - TV/EBO.
ITC
The ITC recapture is now automatic, in contrast to the former method which used the recapture period in Parameters – Asset - Miscellaneous (eliminated).
International
Japanese DV capitalized fee for property tax is now automatic if selected under International.
Lease vs. Purchase
The Title Transfer, Bargain Purchase, Economic Life and Last Quarter tests are now implemented in LvP mode. The FAS classification report documenting their results is in the FAS group.
Asset information has been separated into common and purchase sections; the ITC details have been removed from the lease side.
Tax Calculations
A new checkbox allows you to control whether bonus depreciation is allowed, even if it is specified in Parameters – Assets – Depreciation. A new selection for the taxation of the residual is available, called Next tax payment date.
Optimization
We now allow an optimization to proceed with 467 method turned on. The program temporarily turns 467 off, then restores it afterwards.
Formerly an annual cash target was multiplied by the base term to get the total. Now it uses the full term, including the interim.
IRS Classification
A new checkbox Ignore if yield is higher and a drop-down box for the associated yield has been added to the 467 selections in the IRS /FAS parameter screen.
Batch
New batch option E includes errors in the results file.
Lease Purchase
In process - modify - purchase date, we have implemented checkboxes to remove the first-year additional (bonus) depreciation, for federal and state.
