Should You Lease your Telecom Equipment?

September 20th, 2016

Technology and leases are like oil and water.

Technology is a depreciating asset; as the equipment grows older, its value decreases due to wear and tear.  If you lease the equipment and there is no option to buy, at the end of the lease you’ll hand back the obsolete equipment and search for newer. For accounting purposes, the equipment doesn’t count as an asset on your balance sheet.

But under new FASB guidance, “a lessee will be required to recognize assets and liabilities for leases with lease terms of more than 12 months.” (FASB News Release 2/25/16, FASB Issues New Guidance on Lease Accounting) It’s RIP to off balance sheet financing, ladies and gentlemen.  The billions of dollars that will migrate onto these companies’ financial statements likely will raise the cost of borrowing for those tapping the capital markets.

If your technology equipment lease threatens to choke the life out of your financials, our TELEFFICIENCY™ program has some solutions. Contact us at contact@cortel.com for more information about options you may wish to consider.

Disclaimer: Subject to applicable accounting tax guidelines. Lease term, payment, etc. can affect treatment. Check with your accountant or tax adviser.