$TSLAQ I have forgone reviewing specific accounting anomalies within $TSLA ‘s financials due to the scale and scope of the manipulations. However, there is an anomaly so interesting I could not help myself: Sales Type Leasing. (1/12)
Sales Type Leasing are generally reserved for manufactures and dealers leasing their own inventory (@retheauditors – forgive the simplicity, it’s Twitter.) It has a component of both revenue recognition & capital leasing standards. (2/12)
Revenue recognition is the PV of payments + PV unguaranteed residual. Cost of Goods sold should be the carrying value of the Inventory – PV of the unguaranteed residual. PV interest rates are implicit rates of the lease or borrower incremental rates. (3/12)
Q4 2019 Leasing sales were $225m with a COGS of $119m in 9,201 units. Q1 2020 Leasing sales were $239m with a COGS of $122m. Very comparable in $ volume. Unit volume however was 9,201 vs 6,104 respectively. (4/12)
On a unit basis, Q4 ASP/ACOGS were $24,450/12,930. Q1 was $39,150/19,990. S&X leasing decreased by (743) units. 3 decreased by (2,314). According to the $TSLA website, Y does not have a leasing option. (5/12)
Each model 3 has the same down payment of $4,500 & payments $399, $499, & $649. S has a $7,500 down payment & payments of $999 & $1,229. X has a $7,500 down payment & payments of $1,099 & $1,399. (6/12)
Assume average payments for each model for a simplifying assumption since we do not have a breakout of unit models. 3 - $515, S – $1,114, X - $1,249. Assume 36 month terms. Ford had the lowest least rates in Feb of 3.66%. (WalletHub) (7/12)
Q1 2019: 3 – Capital Lease $14,726, X – Capital Lease $29,595, Y - $32,270. $14,726 x 4,164 = $61m. Average X & Y payments = 30,932 x 1,940 = $60m. Leasing down payment & payments = $120m in theory in Q4. Leaving $119m for residuals ($19.5k per) (8/12)
Q4 2020: Same assumption different volumes. 3 = $95.4m, S/X = $84.2m. Leasing down payments & payments = $178.6m in theory. Leaving $45.4m for residuals ($4.9k per.) (9/12)
Before anyone blows up my feed, I get the fact that these are estimates. I am looking for significance of the difference with my assumptions. I do not believe my calculations for the residuals are off by $14.6k per unit. (10/12)
@bgrahamdisciple found $CVNA posting of used $TSLA autos above new car listing prices. This is important because audit evidence is often obtained from third parties. Sources for residual values are typically Kelley’s & autodealer exchanges. (11/12)
In the last 90 days, auto dealer exchanges were closed. Kelley’s had a small volume size for evaluation. Listing prices would be next for valuations. 3/31 is an unaudited quarter. Draw any conclusions you wish. (12/12)
