Verizon Wireless 2014 Annual Report Download - page 54

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52
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS continued
NOTE 7
LEASING ARRANGEMENTS
As Lessor
We are the lessor in leveraged and direct nancing lease agreements for commercial aircraft and power generating facilities, which comprise the majority
of our leasing portfolio along with telecommunications equipment, commercial real estate property and other equipment. These leases have remaining
terms of up to 36 years as of December 31, 2014. In addition, we lease space on certain of our cell towers to other wireless carriers. Minimum lease pay-
ments receivable represent unpaid rentals, less principal and interest on third-party nonrecourse debt relating to leveraged lease transactions. Since
we have no general liability for this debt, which is secured by a senior security interest in the leased equipment and rentals, the related principal and
interest have been oset against the minimum lease payments receivable in accordance with U.S. GAAP. All recourse debt is reected in our consolidated
balance sheets.
At each reporting period, we monitor the credit quality of the various lessees in our portfolios. Regarding the leveraged lease portfolio, external credit
reports are used where available and where not available we use internally developed indicators. These indicators or internal credit risk grades factor his-
toric loss experience, the value of the underlying collateral, delinquency trends, and industry and general economic conditions. The credit quality of our
lessees varies from AAA to CCC+. For each reporting period, the leveraged leases within the portfolio are reviewed for indicators of impairment where it
is probable the rent due according to the contractual terms of the lease will not be collected. All signicant accounts, individually or in the aggregate, are
current and none are classied as impaired.
Finance lease receivables, which are included in Prepaid expenses and other and Other assets in our consolidated balance sheets, are comprised of
the following:
(dollars in millions)
At December 31, 2014 2013
Leveraged
Leases
Direct Finance
Leases Total
Leveraged
Leases
Direct Finance
Leases Total
Minimum lease payments receivable $ 1,095 $ 8 $ 1,103 $ 1,069 $ 16 $ 1,085
Estimated residual value 600 2 602 780 5 785
Unearned income (535) (2) (537) (589) (4) (593)
Total $ 1,160 $ 8 $ 1,168 $ 1,260 $ 17 $ 1,277
Allowance for doubtful accounts (78) (90)
Finance lease receivables, net $ 1,090 $ 1,187
Prepaid expenses and other $ 4 $ 5
Other assets 1,086 1,182
$ 1,090 $ 1,187
Accumulated deferred taxes arising from leveraged leases, which are
included in Deferred income taxes, amounted to $0.9 billion at December
31, 2014 and $1.0 billion at December 31, 2013.
The future minimum lease payments to be received from noncancelable
capital leases (direct nancing and leveraged leases), net of nonrecourse
loan payments related to leveraged leases and allowances for doubtful
accounts, along with expected receipts relating to operating leases for
the periods shown at December 31, 2014, are as follows:
(dollars in millions)
Years
Capital
Leases
Operating
Leases
2015 $ 46 $ 196
2016 115 168
2017 39 76
2018 57 51
2019 44 19
Thereafter 802 20
Total $ 1,103 $ 530