(815 ILCS 636/10.40)
Sec. 10.40.
Constant yield method.
(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.
(Source: P.A. 89-625, eff. 1-1-97.)
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