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following additional information as to the particular truck:
(1) The term of the lease; (2) the base rent;5 and (3) the
monthly rental charge.
The base rent represents the sum of all of the monthly rent
due throughout the lease transaction for the particular truck.
The base rent is dependent on the lessor's cost of obtaining the
truck and refitting it to petitioner's specifications, which
could include the purchase and attachment of the refrigeration
units. Over the lease term, a fixed portion of the monthly rent
is applied to reduce the base rent. The amount of the reduction
is calculated to be equal to an amount that, at the end of the
lease term, effectively reduces the base rent to zero.6 The
remaining portion of the monthly rent is a service and
administrative charge that is not applied to reduce the base
rent.7
5 The ARI master lease refers to this figure as the
Capitalized Value.
6 The ARI master lease reaches the same result by providing
that, upon the termination of the lease period, the Capitalized
Value is reduced by the "total depreciation reserve". The "total
depreciation reserve" is determined by multiplying: (1) The
number of months a vehicle is billed in service and paid by the
Lessee, times (2) the Capitalized Value, times (3) the monthly
depreciation percentage, which is determined at the outset of the
lease. The monthly depreciation percentage is calculated to be
equal to an amount that, at the end of the lease term,
effectively reduces the Capitalized Value of the truck to zero.
7 Under the ARI master lease this is the portion of the
(continued...)
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Last modified: May 25, 2011