Leasing Like a Methonf of Investing Investitions
Business and Management
Submitted By sitovcristina
1. What is leasing?
Leasing is a process by which a firm can obtain the use of a certain fixed assets for which it must pay a series of contractual, periodic, tax deductible payments.
According to legal and economic viewpoints, leasing is the "transferral of capital goods for use for a defined time against payment". Due to reporting possibilities in the balance sheet, leasing is an alternative from a tax point of view to financing.
In order to take a leasing you should sign a contract, that is called “lease contract”. Leases are the contracts that lay out the details of rental agreements in the real estate market. For example, if you want to rent an apartment, the lease will describe :
-how much the monthly rent is
-when it is due
-what will happen if you don't pay
-how much of a security deposit is required
-the duration of the lease
-whether you are allowed to have pets
-how many occupants may live in the unit and any other essential information.
The parts that are participating at this contract are :
a.the lesee- the receiver of the services or the assets/ the renter ; the person renting property under a written lease from the owner
b.the lessor- the owner of real property who rents it to a lessee pursuant to a written lease
2. Types of leasing
There are three main types of lease: Finance Leasing and Operating Leasing and Contract Hire. Finance Leasing * Under a finance lease, the finance company owns the asset throughout and the agreement covers a set period – considered to be the full economic life of the asset. Often, there is an option to continue leasing at a reduced, or ‘peppercorn’ rate, at the end of the contracted period; * As you are not the owner of the asset, you cannot sell the asset during the rental period ; * The leasing company recovers the full cost of the equipment, plus charges, over the period of the...