[ale] Compaq Reliant web server

[Leonard Thornton]

It is far more cost efficient, both from a tax standpoint and a technology 
standpoint to lease as opposed to buying.  If you purchase computers, you 
are forced into depreciation schedules for tax purposes which far exceed 
the usable life of the computer equipment and imposes significant costs to 
replace the equipment early.  Additionally, the capital cost associated 
becomes a taxable asset used in determining the value of the company and 
subsequent taxable  value at the end of the year.  Leasing allows you to 
obtain the best equipment for a more flexible time period AND you get to 
use the expense of the lease as a write off against income at the end of 
the year.

At 02:02 PM 7/12/2001 -0400, Dan Mount wrote:
>-----Original Message-----
>From: Bao C. Ha [mailto:baoha at sensoria.com]
>Sent: Thursday, July 12, 2001 1:22 PM
>To: ale at ale.org
>Subject: RE: [ale] Compaq Reliant web server
>
><snip>
>
>All of the computers are replaced by leased ones.  The
>3 year-leases cost more than just to buy the computers
>outright.
>
>Unfortunately, your tax-payer money is paying for these
>mis-management mistakes, which actually showed up as
>progresses.  This was an IT department which rebooted
>Unix servers at least once a week to fix a memory leak
>problem.
>
></snip>
>
>I'm not an accountant (bean counters feel free to elaborate/correct me),
>I'm not sure of specific numbers, but here is how I understand the lease
>versus purchase decision.
>
>Would you rather come up with all of that cash out of pocket, or pay for
>it over time? A company buying large amounts of equipment would run out
>of cash trying to buy all of the equipment that it might need. If you
>lease, you just start making monthly payments. Also leasing gives the
>company opportunities to write off the cost of the equipment in the time
>of the lease. At the end of the lease the company would probably replace
>the equipment anyway. Why not finance? Well, in certain cases it might
>be attractive, but leasing generally gives the company more cash in hand
>and a quicker 'depreciation' versus purchase. Go talk to your bean
>counter about capitol expenditures versus leasing and he/she can give
>you more insight to the tax/financial implications that each brings.
>
>DM
>
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>To unsubscribe: mail majordomo at ale.org with "unsubscribe ale" in message 
>body.

The difficult while you wait.....the impossible overnight.

Leonard Thornton
Intelis, Inc.
5960 Crooked Creek Rd
Suite 30
Norcross, GA  30092

Office: 770.825.0032
Fax:            770.825.0028
Cellular:       404.583.5402
Pager:          888.785.9188
Email:          Leonard at Intelis-Inc.net

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