📝 One-liners · 49 cards
Lease Finance and Hire Purchase
Risk & reward transfer — Finance Lease / Operating Lease?
Finance Lease: Substantially to lessee; Operating Lease: Stays with lessor
Duration — Finance Lease / Operating Lease?
Finance Lease: Long — usually covers major part of economic life; Operating Lease: Short — far less than economic life
Cancellation — Finance Lease / Operating Lease?
Finance Lease: Generally non-cancellable; Operating Lease: Often cancellable with notice
Asset on lessee's books — Finance Lease / Operating Lease?
Finance Lease: Yes — Right-of-Use asset + lease liability (Ind AS 116); Operating Lease: Yes (single lessee model under Ind AS 116) — but lessor still treats as operating
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