Lift Truck Tips - New accounting rules to impact operations
                     
Lift Truck Tips: New Accounting Rules to Impact Operations



 
 
  

      

Olive Safety 

Lift Truck Tips: New 

Accounting Rules to Impact 

Operations 


                            

olivesafety.ie  +353 014111011 

Material handling is a continuous process like movement, security, storage and 

control of materials and products throughout the manufacturing phase, 

warehousing, distribution, consumption, and disposal. 

 

The current accounting standards must include the capital leases, which have to 

be reported on the balance sheet as an asset and liability. 

There are various forklift leasing options against the benefits of purchasing 

completely and also can acquire a key piece of materials handling equipment It 

is a decision that connects on both 

financial and operational factors. 

 

Forklift leasing can have an 

opportunity to use the newest up to 

the minute equipment with little or 

no cash. The benefit of a 

predetermined replacement cycle, 

avoiding the responsibility and paying only for what you use. 

 

A comfortable forklift operator has historically been difficult to manage and 

which is a productive one. Always ensure a holistic view of requirements and 

costs according to the new accounting rules.  

 

 

 

 


                            

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There are generally several different types of forklift leasing options to 

control cost efficiently:  

 

• A fair market value lease: Which is also called residual lease or 

operating lease residual lease or operating lease, generally will have the 

lowest payments. 

• A full payout lease:  Sometimes called a dollar buyout lease or capital 

lease, comes with higher payments, but you’ll own the equipment at the 

end of the lease term. 

• A full service lease: Which is like a long-term rental in that you make a 

monthly payment and the forklift provider is responsible for reliability 

and repairs. 

 

For a business that has light forklift use and expects a longer equipment life, 

makes perfect sense to own a new equipment. For a heavy use application an 

operational lease may be a better solution and will able to control the financial 

budget.  

 

The Different Types of Forklift Leases 

 

• Fair market value lease (FMV) also called 

o residual lease 

o operating lease 

• Full payout lease (FPO) also called 

o Dollar buyout lease 


                            

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o Capital lease 

• Full service lease 

• Rent to own 

 

Operating leases, however, are supposed to be footnoted on the balance sheet 

but are expensed on the income statement. 

 

A Fair Market Value Lease (FMV) is the most popular type of operating lease. 

With this, you pay for the use of the forklifts or equipment. The benefits: Monthly 

payments are generally lower than other kinds of leases because the residual 

value is used in calculating the payments required to finance the forklifts. 

 

 Operating Lease. An operating lease is known as a “non-ownership” lease or 

“off-balance sheet” financing. ... A Fair Market Value Lease (FMV) is the most 

popular type of operating lease. With this, you pay for the use of the forklifts or 

equipment. 

 

Operating leases, however, are supposed to be footnoted on the balance sheet 

but are expensed on the income statement.  

 

 

 

 

 

 


                            

olivesafety.ie  +353 014111011 

The Pros and Cons of Forklift Leasing:  

• Fair market value leases:  

o Pros:   

▪ Most affordable 

▪ Pay for only the use of the equipment 

▪ Payments may be tax deductible 

o Cons:  

▪ Forklift is more expensive to buy at the end of the lease. 

• Full payout lease: 

o Pros: 

▪ Own the equipment at the end 

o Cons: 

▪ A leasing company borrows money, adds profit, then lends it.  

 

  Major Benefits:  

- Fixed repayments over a fixed term Terms of 24 to 60 months. 

- Payments are 100% tax deductible when the equipment is used solely for 

business purposes. 

- Helps preserve your working capital. At the end of the term you just return the 

goods. 

- Options to make an offer to purchase or on rent the goods may be given at the 

end of the term. 

- Forklift maintenance is covered in cost, except accidental damage or operator 

abuse. 

- Makes budgeting easy. 


                            

olivesafety.ie  +353 014111011 

Here are five reasons for why leasing forklifts makes better business 

sense: 

 

1. Access to the latest technology.  

2. Flexible payment options. 

3. Helps you manage your budget.  

4. Maintenance is covered.  

 

There are many things that can do to take advantage to help create awareness 

about the dangers that forklifts present and how to minimize the potential for 

accidents that can cause injury or death, damage to the facility, equipment, and 

high financial losses.