As19

1648 views 3 replies

what is ment by finance lease?

Replies (3)

When the lessor transfers substantial portion of risks and rewards which is incidental to ownership of an asset to the leesee it is called finance leese. it is to be noted tat ownership does not inculde legal ownership.

Following are the situations -

1. The lessee will get legal ownership of asset at the end of the term.

2. the lease term covers the major part of life of asset

3. the asset can be used by the lessee only without major modifications.

4. lessee has an option to but the asset at a price lower than its expected FV at the date on which option will be exercised

 

Additional Point For Finance Lease

5. Asset is of Special nature which can be used by lease only.

In a logical way if u wanna think.. Imagine u go to a showroom to Purchase a BIKE worth 100000. U dnt have enough money. SO u take it on lease and pay money in instalments. Even though u are paying in instalments.. You are the owner of the Asset.. This is a Finance Lease.. 

 

Nw suppose u take a building on lease for 5 years. U pay rent. This is expense for the company and they are not the owners of the building. This is operating lease.. 

Leave a Reply

Your are not logged in . Please login to post replies

Click here to Login / Register  

Company
13 July 2026
AVP / VP - PCG Advisory

Workforce Connect

Mumbai

MBA

View Details
Company
22 June 2026
Accountant

Global Image Technologies Private Limited

New Delhi

MBA

View Details
Company
06 July 2026
Accountant

Agarwal Anoop and Associates

Noida

CA Final

View Details
Company
ARTICLESHIP 27 June 2026
CA Articled Trainee And Paid Assistant

SKAA & Associates

New Delhi

CA Inter

View Details
Company
ARTICLESHIP 16 July 2026
Article Assistant

Sahil Agarwal & Company

Mumbai

CA Inter

View Details
Company
ARTICLESHIP 08 July 2026
Article internship

AJAY SINGH AND CO LLP

Thane

CA Final

View Details
Company
ARTICLESHIP 30 June 2026
2 posts Article assistant and Articleship completed students

Chirag N Shah & Associates

Mumbai

CA Inter

View Details
Company
ARTICLESHIP 30 June 2026
Taxation Content Writer Intern

Interactive Media Pvt Ltd.

New Delhi

CA Inter

View Details