There are two main types of leases namely; financial and operating lease. A financial lease is where the company possess the asset throughout the lease period; the lessee may not sell the property during the period of a lease. On the other hand, operating lease involve a lease that is utilized if the asset has a resale value, the lessor carries out the risk associated with the lease till the end of the period. Commercial lease agreement such as real estate involves the following components: names of the tenant, this involves the first and the last names of the tenant. The lease agreement also involves terms of the lease. Lease term is the length of time/time frame when the contract between the lessee and the lessor is expected to expire, upon which the lessee may renew the agreement. Another component involves rent to be paid. The amount of rent that the tenant (lessee) should pay to the landlord (lessor) should be clearly be specified as well as the due date for payment. In addition, the responsibilities of the parties involved in a lease agreement should be clearly be defined to avoid conflict between the lessee and lessor.
Although considered as an actual sale in normal accounting standards ownership of the asset in question is held by the lessor until the end of the term of the Financial Lease. Financial Leasing allows the lessee to reap the benefits of owning the asset by utilizing or maximizing its economic benefits within its viable and useful life.
Islamic finance has become a centre of attention in the global financial market with its practice mainly focused on being ethical which is based on the teachings of Prophet Mohammad (P.B.U.H) and the Holy Scripture of the Muslims with the principle consistent with Shariah (Islamic law), The Holy Qur’an.
b. At the inception of the lease, Lani should account for the lease as an asset which is determined by the value of the property. Thus, the amount to be recorded by the lessee should be equal to 75 percent or more of the estimated remaining economic life of the leased property.
I blamed myself for getting suckered into such an awful lease, and I was furious at the landlord." (Tedlow, par.11)
This is how Sam Walton, the founder of Wal-Mart, reacted when he was thrown out of his Front Street store in Newport because his lease agreement didn't have a renewal clause.
Former rules allowed health care providers to lease real estates and equipments taking it as operating lease. Leasing equipments is necessary for providers to acquire other necessary machinery and finances required for running the organization.
In an operating lease, the payments are regarded as operating expenses which are recorded in the profit and loss statement (Ruppel, 2010). In the tax treatment, the lessee under a capital lease is taken to be the owner of
Availability of money is the first and foremost factor that we need to consider when making such a decision. If for instance a Company needs to buy machinery and it does not have enough capital and neither is it willing to take a loan, then in such a scenario it would be essential if the company goes for a lease since it requires much less payment.
The paper compares the cost of buying 2015 Honda Accord EX sedan with that of leasing the same car.
The leasing option appears to cost $4,372 less than purchasing a new 2015 Honda EX sedan. However, it is worth noting that leasing
Once the lease period is over, the individual returns the car to the leasing company for the purpose of disposal. Following is a comparison of the costs that an individual has to
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Leasing is a process by which the lessee pays the lessor certain amount of money to use home machinery, equipments and other assets for a specified period of time. At the end of the contract the leaser may be able to purchase the item with the amount of money previously paid accumulating to make the purchase price as per the lease agreement. …