Multiple states have passed regulations for commercial financing disclosure laws that will require an Annual Percentage Rate (APR) similar to the Regulation Z (Reg Z), Truth in Lending Act for consumer loans that is computed in TValue amortization software. The APR is a standardized way to express the total cost of credit, including both interest and fees, as a single percentage rate. By requiring commercial lenders to disclose APRs, these state regulations will help businesses understand the true cost of borrowing and make more informed decisions about their financing options.

Have you ever been quoted a “lease factor” and you don’t know what it means? A lease rate factor is the regular lease payment as a percentage of the total cost of the leased equipment. Stated another way, if you multiply the lease rate factor by the cost of the leased equipment, you will determine the regular payment amount. The lease rate factor is a seemingly simplistic way of getting the payments but it is more complex than it appears.

The new Lease Accounting Regulations (ASC 842) require organizations that lease assets, or “Lessees” to recognize the assets and liabilities of those leases on their balance sheets. Most leases, including most operating leases, are now capitalized on the balance sheet.

The Government Accounting Standards Board (GASB) issued Statement No. 87, Leases. This replaces the previous lease accounting methodology and establishes a single model for lease accounting based on the foundational principle that leases are a financing of the right to use (RTU) an underlying asset. Following are highlights from GASB Statement No. 87 – Leases (ca.gov).

The imputed interest rate is an unstated interest rate and it can cover many different scenarios. To calculate an imputed interest rate, you need to input the actual cash flows and then you can solve for the interest rate.