equipment is purchased in preference to new equipment, mainly because of economic considerations Purchase of used equipment adequately satisfies the

buyers needs and also easily adaptable to the existing operations.

Used

Sources of used equipment` i)directly from the owner ` ii)used equipment dealers ` iii)brokers and auctioneers.

The first source of used equipment-original owner- is usually is usually preferred by most prospective buyers as they feel that it is advantageous to buy the machine from the original owner as they can see the machine in operation at the source and also learn details about the usage history of the machine.

Used equipment do not carry any warranty from the supplier. But in case of purchase from dealers,guarranty can be obtained. Brokers and auctioneers represent the most risky source as they do not carry any warranty. Other disadvantage is that used equipment purchased through brokers and auctioneers cannot be tested before.

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Inability of a buyer to determine the true condition of the machine and to estimate the length of economic life of equipment from the time of purchase onwards. Suppliers do not provide service for used equipment after the sale. All transportation ,handling, installation and start of cost as well as risks of breakdown are to be borne by the buyer. The buyer have to analyze all records and history cards of the equipment to analyze the performance over its life forecast its future performance.

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The question of leasing equipment arises because of- i)availability of funds, Ii)the duration for which the equipment is required. Iii)the necessity of the organization to obtain the equipment immediately(purchase of new equipment may involve a lot of procedural and policy delay. Iv)capital equipment is available only on lease.

Major considerations of leasing` It may be economical to lease the equipment when it is needed for a relatively short period. ` In the context of fast changing technology and obsolescence of equipment, leasing could avoid the purchase of a less efficient piece of equipment. ` In general, in a lease the lessee bears the dismantling, loading and unloading charges and transportation expenses both ways from lessors location to lessees and return, where as in purchase of new equipment, the equipment is generally sold at a delivered price.

The rent of leased equipment is an item of expense for tax purposes while the purchase price is an investment to be depreciated over a number of years. One of the most important disadvantage of leasing is that the lessor retains control of the equipment and not the lessee.