07/14/2014

It has occurred to us that in our shop talk about extended yield methods, we did not point out the fact that under the traditional sinking fund method or Standard Sinking Fund Method as it is alternatively called, earnings are reported on a much more even basis for all years over the entire life of the transaction (see Exhibits A,B,C -3). That fact when combined with all the other virtues of the traditional method  seems to make it a prime candidate for consideration as a method for reporting lessor leveraged lease interest income. It has the virtue of preserving the after tax considerations of leveraged lease accounting and helps provide the impetus (though not as great due to the loss of up fronting income on early years EPS) to continue doing leveraged leases should the tax appetites and/or market ever return for what ever reason(s). Where the FASB is going to land is anybody's guess! Retaining the MISFM-Legacy is certainly an option, though an unwieldy one, to be sure. I must repeat what I said on my blog  earlier on referring to the MISFM-Legacy...."Born of Ignorance, lived in Glory and should die in ignominy". Perhaps having up fronted all the income in leveraged deals done "back in the day" has helped lead some companies to consider leaving the business for more fertile grounds as what is left in income can't support the carrying costs. Does anyone have any companies in mind? The ole matching costs against revenues issue is rearing it's ugly head. What goes around, comes around! .........Just saying.