Sec. 10.40. Constant yield method.

284 words·~1 min read·/il/chapter-815/act-636/10-40·

A research copy — for the controlling text, always check the official state or federal source. Not legal advice.

(a)In the case of a periodic payment lease, the method of determining the lease charge portion of each base lease payment pursuant to which the lease charge for each computational period is earned in advance of that period by multiplying the constant rate implicit in the lease times the balance subject to lease charge as it declines during the lease term. At any given time during the scheduled term of a periodic payment lease, the balance subject to lease charge is the difference between the adjusted capitalized cost and the sum of

(i)all depreciation amounts accrued during the preceding computational periods and

(ii)the first base lease payment.

(b)In the case of a single payment lease, the method of determining the periodic earning of the lease charge portion of the single lease payment pursuant to which the lease charge for each computational period is earned in advance of that period by multiplying the constant rate implicit in the lease times the balance subject to lease charge as it increases during the lease term. At any given time during the term of a single payment lease, the balance subject to lease charge is determined by subtracting from the residual value the total lease charge scheduled to be earned over the lease term and adding to the difference all lease charges accrued during the preceding computational periods.

(c)In the case of either a periodic payment lease or a single payment lease, the periodic lease charge calculations are based on the assumption that the holder will receive the lease payment or payments on their exact due date or dates and that the lease goes to its full term.