IT Equipment Buy vs' Lease Decision

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IT EquipmentBuy vs. Lease Decision

• Gary E. Carpenter, CPA
• Technology Assurance Committee
• New York Society of CPAs
• Tuesday December 14, 2004

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What Should We Look At In The Buy vs. Lease
Decision?

• What are the numbers
• What is the life of the asset
• Corporate policies
• Residual value
• Upgrading
• Technology
• Cash and/or financing resources

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You Decide to Buy

• How will you pay for the asset?
• Identify the Economic and Corporate Life of the
  asset.
• Plan on how you will dispose of the asset.
• Plan your replacement/upgrade asset now.

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You Decide to LeaseNow What?

• Work with a company you know and TRUST!!!
• List what your needs are.
• Do what if scenarios.
• Have an exit plan at the end of the lease.
• Beware of the low number.

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The Lease Ends,What do We do Now?

• Know when the lease ends.
• Make sure you know when the lease ends.
• Then check again to see when the lease ends.
• At least six months before the lease ends
• Decide if you want to keep the asset
• Contact the lessor
• Negotiate new contract or prepare to return the
  asset
• If returning the asset what is your replacement
  plan

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We Made the Wrong Decision!!

• If the asset was purchased
• What is wrong?
• Technology
• Asset
• Impact on financial statements
• Finances

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We Made the Wrong Decision!!(continued)

• If the asset was leased
• What is wrong?
• Technology
• Asset
• Impact on financial statements
• Lease agreement
• Residual value of the asset

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Cowboy Logic

• Good judgment comes from experience, and a lot of
  that comes from bad judgment.
• Never ask a barber if he thinks you need a
  haircut.
• If you get to thinkin youre a person of some
  influence, try orderin somebody elses dog
  around.
• Lettin the cat outta the bag is a whole lot
  easier n puttin it back.
• The quickest way to double your money is to fold
  it over and put it back in your pocket.

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Gary E. Carpenter, CPA

• Carpenter Information Technologies, Inc.
• P.O. Box 15278
• Syracuse, NY 13215-0278
• 315/487-4567 Fax [phone]
• E-mail cit_at_twcny.rr.com