- 7 - 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...)Page: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 Next
Last modified: May 25, 2011