Chap 6 finance.docx - Chap 6 Leasing A lease is a contract...

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Chap 6 Leasing A lease is a contract between a lessor and lessee for the hire of a particular assets. The lessor retains ownership of the assets but conveys the right to use of the assets to the Leasing. Lease generally involves two parties, it is the lessor and the lessee. Under this agreement, the lessor transfers the right to use the lessee in return of the lease rentals agreed upon. Hire Purchase is a kind of instalment purchase where the businessman agrees to pay the cost of the equipment in different instalments over the period of time. Finance Lease This is an agreement between the lessor, who provides finance for the assets, and the
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Unformatted text preview: lease. The person supplying the equipment is usually a third party; the lessor just finances the assets. The lease is responsible for the servicing and maintenance of the assets. The lessor does not retain the risk or rewards of ownership Operating Lease This is a rental agreement between two parties whereby the lessor supplies equipment to the lessee. The lease period is usually shorter than the useful life of the asset. The lessor usually retains the responsibility for servicing and maintaining the leased equipment. The lease can sometimes be cancelled at short notice...
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