Leasing
Leasing
Leasing
Hassan Ijaz Asif Masood BSAF 12114 3rd BS(Accounting & Finance) Financial Management
LEASING
Definition of Leasing
Leasing is defined as A contract that allows the use or occupation of property for a specific period of time, with a specified amount of rent.
Meaning of Leasing
A contract by which the owner of land or a building agrees to let another (lessee) the use of it for a certain time on rent.
Lessee
Financier
lease is a legal document containing language that spell out all responsibilities of the lessor. Leases are used for the rental of homes and apartment dwellings, as well as automobiles and other mechanical equipment.
Payment of rent
10
depreciation charge
finance charge
Finance part is interest on the money the lease company has tied up.
a principal charge
finance charge
Types of Leasing
Operating Lease
Financial Lease
Conveyance Lease
Operating Lease
Contrast to the financial lease
A lease agreement gives to the lessee only a limited right to use the asset. The lessor is responsible for the up keep and maintenance of the asset.
Financial Lease
Long-term, non-cancellable lease contracts are
known as financial leases. At lease it must give an option to the lessee to purchase the asset he has used at the expiry of the lease. High cost high tech equip.
Conveyance Lease
The act of transferring an ownership interest in real property from one party to another. Conveyance also refers to the written instrument, such as a deed or lease that transfers legal title of a property from the seller to the buyer.
Advantages of Leasing
Save from recurring cost of finance
Absence of restriction Tax benefit Increase the capacity to borrows Useful is case if fast changing technology Faster and cheaper credit
Disadvantages of Leasing
No benefit of residential value
No benefit of ownership High cost of leasing Not flexible
CONCLUSION
In leasing only tangible assets can be leased out.
Transaction in which a party owning an asset provides the assets for use over a certain period of time to another party.
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