LEASE TERMINATION METHOD

A method for derecognizing the commitment of a lessor in an operating lease having a lease liability including the steps of holding by a lessee an operating lease wherein the operating lease has a future value S1 and determining the present value P1 of the operating lease in accordance with the future value S1. The method also calls for buying the operating lease by a buyer entity for a value P2 greater than the present value P1, thereby providing a first net gain and holding the lease liability by the buyer entity for a period of time and discharging a lease liability of the operating lease at the end of the period of time for a value S1 that is less than a future value S2 thereby determining a second net gain. The present value P2 is determined according to the present value P1 and according to a time t years prior to the time at which the value of the lease liability reaches S1. The present value P2 is determined according to the value S2 and the future value S1 is known at the time of the determining of the present value P1. The first net gain is a net gain for the seller and the second net gain is a net gain for the buyer entity. The lease liability is recorded as a long term debt by the seller and may be at present value by the buyer entity. The buyer entity can be an insurance company.