1. FY 2018 YEAR-END TRAINING Schedule H – Capital Leases
Auditor-Controller’s Office
Presented By: Caroline Santos
2018 Year End Training – Chapter 12

2. Schedule H - Capital Leases
A lease that substantially transfers all the risks and benefits of ownership of the property to the lessee.
2018 Year End Training – Chapter 12

3. Schedule H - Capital Leases Criteria
Title transfer at the end of the lease term
Bargain purchase option
Lease term is 75% or more of economic life of leased property
Present value of lease payments are equal to 90% or more of the fair value of property
2018 Year End Training – Chapter 12

4. Schedule H - Capital Leases Test Sheet
Capital Lease Test link:
2018 Year End Training – Chapter 12

5. Schedule H - Capital Leases
Test Sheet
2018 Year End Training – Chapter 12

6. Schedule H - Capital Leases
Scenario
The ACO has two new leases which meet the requirement to be recorded as capital leases.
The beginning fiscal year lease principal balance is $1,266,885
Additions of $531,754 were made during the fiscal year
Principal payments of $214,601 were made during the fiscal year
2018 Year End Training – Chapter 12

7. Schedule H - Capital Leases7
2018 Year End Training – Chapter 12

8. Schedule H – Capital Leases Rental Payment Schedule
2018 Year End Training – Chapter 12 8

9. Schedule H – Capital Leases
Supporting Document
2018 Year End Training – Chapter 12

10. Schedule H - Capital Leases
Question
The ACO has been making a $1,700 monthly payment for 5 copiers. The payments will end in 2 more years at which time the copiers will be owned by the ACO.
What kind of lease agreement do we have?
Capital lease
Operating lease
2018 Year End Training – Chapter 12

11. Schedule H - Capital Leases
Answer
Capital Lease.
Reason: Title transfers to ACO at the end of the lease term.
2018 Year End Training – Chapter 12

12. Schedule H - Capital Leases
Mail Schedule H and Supporting Documents to:
ACO Year-End
Mail Stop #1050
Questions?
Submit them by to
2018 Year End Training – Chapter 12