LEASING

PRESENTED BY

ANN PAUL
10UTA06
OVERVIEW
1. Definition of Leasing

2. Types of Leasing

3. Advantages and Disadvantages of

Leasing

4. Difference Between Leasing and

Hire Purchase.
DEFINITION
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 deductable payments.

 Lessor – Lease – Lessee-Rent-Term.

E.g.:Renting our apartment to friends

while we were abroad for a rental
amount.
TYPES OF LEASING
Finance

Others Operating

Sales &
Direct Lease back

Leveraged
T Types Finance Operat Sales Leverag Direct
ing &Lease ed
Y Back
P Ownership Lessor Lessor Lessor Lessor Lessor
E leasing or or 3rd
leasing party
S co. co.
of Maintenan Lessee Lessor Lessor Lessor Lessee
L ce
E Assets Lessee Lessor Lessor Lessee Lessor
A Retained or to or 3rd
whom party
S its been
I sold
N Balance Shown Not Shown Not Not
shown shown shown
G Sheet
(lessee)
ADVANTAGES &DISADVANTAGES

ADVANTAGES DISADVANTAGES
Fixed rate Lease termination
Inflation friendly  Usage rights and
Less upfront cash no Ownership
flow rights
Better Utilization  Maintenance and

of Equipments Insurance
Reduced cost  Losses for
beneficiary
LEASING & HIRE PURCHASE
 Meaning
 Ownership
 Depreciation
 Accounting Entries
 Provision for Finance
 Repairs and Maintenance
 Amount Of Installment or Rent
 Type of Assets