"Prime": A Product that is Compatible with the New Lease Accounting Standards

We provide a plan that allows lease processing of transactions even under the new lease accounting standards.

Customer Problems and Concerns

There is a mix of finance leases and operating leases so that our accounting work is complicated.
Because we have leased items listed in our assets, our ROA is lower.

Service Details

This service is for "listed companies and their related companies" and "large companies as defined by corporate law" to which lease accounting standards are applicable.
Establishing a specific "termination allowed period" within the lease period reduces the "current value of the total lease amount during the lease period which cannot be terminated" that is the basis for the full-payout criteria and makes it an "operating lease transaction."
(Business Model Patent )

 Figure : Even with the new lease accounting standard, we will deliver plans that can lease finance lease transactions.
  • All lease transactions are made into "operating lease transactions" in the accounting books.
    Because lease processing is allowed even under the new lease accounting standards, the following effects can be expected.
    • Reduced clerical work
      Depreciation and other accounting procedures for assets are not necessary so that human resources can be transferred to sales and other departments.
    • Maintaining credit availability
      Because these are not included in "lease obligations" (a debt item), they will not have an effect on credit availability from financial institutions that can be used for other purposes.
    • Improving asset effectiveness
      Because the leases are not listed among assets, the balance sheet is more concise and the ROA (profits/total assets) is not decreased so that the effectiveness of assets on financial statements is improved.
  • Lease transaction notation reference material is determined and created based on the period in which termination is not allowed.
    The notation reference material for customers regarding this product will be output in the customer's account closing month.
    The notation reference material will "determine the full payout" from the period in which termination is not allowed, and based on that result the lease transaction category (i.e., "operating lease transaction") will be specified.
  • The consumption tax for the lease fee will not require any adjustments according to the tax law.
    As a tax item, operating lease transactions are loans of assets, so that they can be handled as leases for tax purposes as well as for accounting purposes.
  • With respect to finance lease transactions with a total lease amount of three million yen or less, even if they can be processed as a lease from the viewpoint of their importance, they should be handled as "purchases" for tax purposes and the consumption tax for the total amount of the lease should be added to the first year of the lease.
Operating lease transaction Finance lease transaction
3 million yen or less
Accounting process Lease process Purchase process Lease process
Tax (consumption tax) process Lease process Purchase process
At start of lease - 60,000 yen consumption tax / unpaid amount 60,000
At each monthly lease payment Lease fee 20,000/
Cash 20,000
Consumption tax 1,000/
Case 1,000
Lease fee 20,000 / Cash 20,000
Unpaid amount 1,000 / Cash 1,000
  • (For a lease period of 5 years and monthly lease amount of 20,000 yen for purposes of paying the consumption tax.)

Applications

Items to check when signing an agreement

  • Lease agreement
    Either a maintenance lease or finance lease is acceptable.
    However, re-leasing is excluded.
    Moreover, lease agreements other than vehicle leases (auto leases) are also excluded.
  • Setting residual value
    Open-ended residual value agreements (settlement type) are excluded.
  • Lease periods
    This can be any length as in the past.

Items to check when terminating an agreement

  • Termination contents
    For "termination by consent" that exceeds the termination not allowed period, there are no termination penalties.
  • Handling fees
    Termination handling fees (50,000 yen per agreement)
    Expenses equivalent to return to original state fees (actual or according to fair examinations)
  • Leased vehicles
    The return of leased vehicles is a condition for termination.
  • When considering whether to lease with this product, we ask that customers thoroughly consult legal or accounting specialists with respect to accounting, tax, and legal risks.

Notification concerning patents

The vehicle lease plan "Prime" is an original product of our company.
We acquired the patent (business model patent) for this product on January 6, 2012.
(Patent No. 4895792)

Cost Reduction Support

Vehicle Control BPO (Business Process Outsourcing)

This service will achieve more optimized vehicle control than even an order-made outsourced solution.

Fuel Management Service "SS Card" and "Fueru Card"

Cost management for refueling by using two cards for the various fuel prices in different regions helps to reduce costs.

ETC Management Service

Makes ETC card application and management work more efficient and centralizes management of toll fees.

Parking Management Service

This service allows cashless use of the Mitsui Repark parking lots throughout Japan.

Tire Storage Service

This service provides storage for tires that are out of service for a given season.

Auto Body Repair Management Service

By using our auto body shop network customers can simplify the body repair arrangement process and make body repair expenses more appropriate. We will also provide various data related to repairs.

Preowned Car Buying Service

We will buy cars that customers no longer need.

Leasing Vehicles that have been Previously Leased

We provide preleased vehicles using vehicles that we have previously leased.

Maintenance Services

Move about comfortably with vehicles that have always been inspected.

Operation Optimization Support

Vehicle Control BPO (Business Process Outsourcing)

This service will achieve more optimized vehicle control than even an order-made outsourced solution.

The e-ADVICE Web Information Service

This is a web-based information management system that centrally manages data for over 400 items about the vehicles our customers use.

Fuel Management Service "SS Card" and "Fueru Card"

Cost management for refueling by using two cards for the various fuel prices in different regions helps to reduce costs.

ETC Management Service

Makes ETC card application and management work more efficient and centralizes management of toll fees.

Parking Management Service

This service allows cashless use of the Mitsui Repark parking lots throughout Japan.

Transport and Registration Modification Services

We will smoothly move vehicles and modify registration information throughout Japan as required when there is a transfer of human resources and the like.

Rental Car Intermediary Service

You will not have any worries even if you suddenly need a car when you're on a business trip. If necessary, we can arrange for a rental car.

Tire Storage Service

This service provides storage for tires that are out of service for a given season.

Service for Advanced Payments for Items Not Covered in the Contract

We will make payments on behalf of our customers for items not covered by the maintenance agreement, such as inspection and repair fees and damage repair fees after accidents. As a result, customers will only have to make payments to one party, thereby reducing clerical work and simplifying cost management.

Web Vehicle Image Service

This service takes photographs of the exteriors of vehicles when they are at the maintenance workshop for inspections and customers can view those photographs on the dedicated site on the Internet.

Support for Creating NOx and PM Law Automobile Usage Management Plans

We will provide the data necessary for our customers to create the "Automobile Usage Management Plans" to be submitted to prefectural governments.

Surplus Vehicle Storage Service

This is a single-stop service that not only stores surplus vehicles, but inspects them, fixes them, and transports them.

Maintenance Services

Move about comfortably with vehicles that have always been inspected.

Accident Support Service

We offer support in handling accidents from start to finish, thereby providing customers with peace of mind. SMA Support's accident support service helps customers resolve problems when an accident occurs.

Auto recycling (AR) business

We organize members-only online bidding events with a nationwide network of approx. 200 vehicle scrap and recycling agents to dispose of wrecked vehicles entrusted by non-life insurance companies, leasing companies, rental car companies, etc.

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