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Archive | Leasing

Advantages and Disadvantages of Leasing for the Lessee

After reading this article you will learn about the Advantages and Disadvantages of Leasing for the Lessee. Advantages of Leasing to the Lessee: (i) Avoidance of Initial Cash Outlay: Leasing enables a firm to acquire the use of an asset without making capital investment in buying the asset. The lessee may avail 100% finance from […]

Advantages and Disadvantages of Leasing for the Lessor

After reading this article you will learn about the Advantages and Disadvantages of Leasing for the Lessor. Advantages of Leasing to the Lessor: 1. Higher Profits: The lessor acting prudently can make high profits from leasing of the asset. The profits will take care of his cost of capital as well as the risk involved. […]

Meaning and Accounting Treatment for Leasing

After reading this article you will learn about the Meaning and Accounting Treatment for Leasing of Assets. Meaning of Leasing: Leasing is an arrangement that provides a firm with the use and control over assets without buying and owning the same. It is a form of renting assets. Lease is a contract between the owner […]

Financial Evaluation of Leasing

This article throws light upon the top two ways for financial evaluation of leasing. The ways are: 1. Lessee’s Point of View 2. Lessor’s Point of View. Financial Evaluation of Leasing: Way # 1. Lessee’s Point of View: (Lease or Buy/Lease or Borrow Decisions): Once a firm has evaluated the economic viability of an asset […]

Computing Lease Rentals (With Example)

This article throws light upon the six main steps involved in computing lease rentals.  1. Determine the cost of the asset which includes the actual purchase price and expenses like freight, insurance, taxes and installation, etc. 2. Determine the cash flows to the lessor on account of ownership of the asset. These include tax advantage […]

Accounting for Lease as per Accounting Standards

After reading this article you will learn about the Accounting for Lease as per Accounting Standards (AS)–19:- 1. Scope of Lease 2. Definitions of Lease 3. Classification 4. Financial Statements of Lessees 5. Financial Statements of Lessors 6. Sale and Leaseback Transactions. Contents: Scope of Lease Definitions of Lease Classification of Leases Leases in the […]

Operating Lease and Financial Lease

This article throws light upon the top two types of lease. The types are: 1. Operating Lease 2. Financial Lease. Type # 1. Operating Lease: An operating lease is usually characterised by the following features: (i) It is a short-term lease on a period to period basis. The lease period in such a contract is […]

Financial Evaluation of Leasing

This article throws light upon the top two ways for financial evaluation of leasing. The ways are: 1. Lessee’s Point of View 2. Lessor’s Point of View. Financial Evaluation of Leasing: Way # 1. Lessee’s Point of View: (Lease or Buy/Lease or Borrow Decisions): Once a firm has evaluated the economic viability of an asset […]

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