Leasing and Off-Balance-Sheet Financing

Off balance sheet assignment help is an important variety of finance assignment help online. ‘Off balance sheet’ financing refers to that mode of financing in which large capital expenditures are kept off the balance sheet in order to keep the debt/equity ratio low. In contrast to expenses like loans, equity and debts which appear on balance sheets, there are other forms of expense like R&D, joint ventures, operating leases etc which do not come up on balance sheets. These are called ‘off-balance sheet’ financing. Off balance sheet assignment help is quit a complex service that we offer as a part of our finance assignment help services.

 

Balance sheet

Off balance sheet assignment help requires a thorough knowledge of the balance sheet.

In financial assignment help services, we know that a balance sheet or a statement of financial position is a summary of the financial balances of a sole proprietorship, a business partnership or a joint stock company. Assets, liabilities and ownership equity are the three main items listed in the balance sheet. A balance sheet assignment help is often described as a “snapshot of a company’s financial condition”. Of the four basic financial statements (income statement, statement of owner’s equity, cash flow statement and balance sheets), the balance sheet is the only statement which applies to a single point in time of a business’ calendar year. Off balance sheet assignment help is an important service of MyAssignmenthelp.com. For more help on balance sheet and off sheet assignment help, trust only MyAssignmenthelp.com’s finance assignment help.

Off balance sheet assignment help gives you complete understanding of the three main components of a balance sheet in which maximum students require finance assignment help:

• Assets
• Liabilities and
• Ownership equity/ Stock Holder’s equity.

Off balance sheet assignment help service helps you to understand each of these three aspects of finance assignment help. The main categories of assets are usually listed first and typically in order of liquidity. Assets are followed by the liabilities. Then owner’s equity is listed. The basic accounting equation is Assets + Liabilities = Owner’s Equity. Another way to look at the same equation is that assets equal liabilities plus owner’s equity. Looking at the equation in this way shows how assets were financed: either by borrowing money (liability) or by using the owner’s money (owner’s equity). For more information log on to MyAssignmenthelp.com for off balance sheet assignment help services.

Hidden liabilities

Off balance sheet assignment help services also gives information on hidden liabilities. There are liabilities that cannot come up in the balance sheet. One of the most popular off balance sheet liability is the cost of operating lease. Operating lease is that type of lease which is usually acquired for a relatively short period of time, in comparison to the useful life of the asset which is leased out. Our Off balance sheet assignment help services explain this:

For instance, an aircraft which has a useful life of 25 years and is only leased out for 5 years then the cost of leasing the aircraft would fall under the category of operating lease. In accounting, there is a lot of speculation as to which cost should be included and which should not be included. Under the current accounting practices in the U.S. operating leases are not considered as a part of the on balance sheet expenses. For more on off balance sheet assignment help get finance assignment help services from MyAssignmenthelp.com.

Operating lease and off-balance sheet financing

Off balance sheet assignment help requires knowledge of different types of leases. There are two types of leases:

1. Financial lease: A financial or a capital lease is a commercial arrangement where the lessee will choose an asset, the finance company financing the lessee would buy the asset on behalf of the lessee and in turn would recover the cost of the asset plus interest on that asset. Off balance sheet assignment help gives complete finance assignment help on financial lease.

2. Operating lease: An operating lease is a commercial arrangement where the lessee will only use an asset in exchange for a financial payment made to the lessor. Off balance sheet assignment help services makes the difference between leases clear.

From the point of view of accounting, operating and financial leases have the following differences. You can find more on these differences from our off balance sheet assignment help:

1. In financial leases, the entire risks and rewards incidental to the use of a particular asset is transferred to the lessee from the lessor. The lessor for all practical purposes surrenders the economic ownership to the lessee who enjoys the asset for most of his useful life. On the other hand, in operating lease, all the risks and rewards are usually kept with the lessor and the lessee only retains the operating use. Get more on this from our off balance sheet assignment help.

2. All financial leases must be shown in the accounting statements. However, operating leases need not be shown in the balance sheets. Several companies hide their operating expenses in order to achieve a positive debt/equity ratio. For more on off balance sheet assignment help, log on to MyAssignmenthelp.com.

An important component of our off balance sheet assignment help is making clear how companies use their off balance sheet assets and liabilities:

• Companies throughout the world, have off-balance sheet assets, liabilities and expenses. From the point of view of the company, the off-balance sheet assets and liabilities help the company to reduce the debt/equity ratio, while from the point of view of banks, off and on balance sheets financing represents different economic interests. In case of a traditional loan, the bank retains the credit risk (the risk that the party might default) by showing the loan in its balance sheet. More on this, can be found on our off balance sheet assignment help.

• On the other hand, in the case of securitized loans, the bank does not show the loan amount in its balance sheet and can pass on the credit risks associated with the loans to a third party. A loan given by a bank is considered as an asset for the bank and a liability for the borrowing company. On the other hand in securitized loans, the amount is not shown on the balance asset of either the borrower or lender. A bank only acknowledges off- balance sheet loans or securitized loans in the notes to the financial statement. Off balance sheet examples can be found on our premier online assignment

Off-Balance sheet expenses and Enron Scandal

Perhaps the best off balance sheet example is The Enron scandal. For the common shareholders and investors, off balance financing may often result in accounting scandals and corporate corruption as in the case of Enron Corporation. The Enron scandal was one of the greatest auditing scandals of the world and one of the best instances of off-balance sheet financing. Enron was started in 1985 by Kenneth Lay. It was formed by the merger of the natural gas pipeline companies, Houston natural gas and InterNorth IN 1985. In the early 1990s when the US congress deregulated the sale of natural gas, the company’s fortunes rose. It became the largest producer of natural gas in America and it share rose by 311 percent in stock markets in America.

However, it was noticed that the company was following dubious accounting standards and complex financial statements in order to dupe the common investors. The shareholder’s of the company filed a 40 billion dollar law suit, after the prices of its share plummeted to less than 1 dollar per share. The U.S. Securities and Exchange Commission (SEC) began an investigation in the midst of which the Company filed for bankruptcy. The auditing committee found that the company had used off balance sheet financing to hide its operating costs and inflate its profit figures. The company’s accounting practices began to spiral out of control when the Wall Street Journal uncovered the scandal. For more on the scandal and many such offline balance sheet examples log on to MyAssignmenthelp.com for off balance sheet assignment help.

The Enron scandal is perhaps the greatest of accounting scandal which used fraudulent accounting methods and principles to inflate its profit figures. One of the most common ways, a company commits accounting fraud is through the use of off-balance sheet expenses and liabilities. Fictitious sales, improper expense recognition, incorrect asset valuation, hidden liabilities and unsuitable disclosures are some of the other accounting malpractices. For more on such practices, log on to MyAssignmenthelp.com, to get offline balance sheet assignment help.

Off balance sheet expenses and such other types of hidden liabilities are often used by corporations to dupe the investors and get more money. Since the Enron scandal broke out, the government has brought in a number of laws debarring publicly traded companies using hidden expenses and liabilities such practices continue even today. For such measures and in order to prevent such off balance sheet examples from happening log on to MyAssignmenthelp.com.

 How MyAssignmenthelp.com provide off sheet balance assignment help?

Management students can now get off balance sheet assignment help in finance assignment help services from Australia’s premier finance assignment help site, MyAssignmenthelp.com. On the other hand, we also provide finance assignment help on a wide variety of other subjects as well. Our off balance sheet balance assignment help experts are student-friendly and we have a 24x7 helpline. So log on to our website in order to get custom made off balance sheet assignment help and improve your grade.