EQUIPMENT LEASING OR LEASE FINANCING
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What is equipment leasing in the context of finance?
Equipment leasing is a contractual arrangement where the owner (lessor) of an asset grants another party (lessee) the right to use the asset for a specified period in exchange for periodic rental payments.
What is the concept of 'full service lease' in lease financing?
Lessor provides maintenance, insurance, and other services along with asset.
Who is a lessor in a lease financing arrangement?
The lessor is the owner of the asset who gives it on lease to the lessee and receives periodic lease rentals as consideration for the use of the asset.
What is a 'net lease' in the context of equipment leasing?
Lessee bears all costs of maintenance, insurance, and taxes on the asset.
Who is a lessee in a lease financing arrangement?
The lessee is the user of the leased asset who makes periodic rental payments to the lessor without owning the asset outright.
What is 'lessor's implicit rate' used for in a finance lease?
To calculate present value of minimum lease payments for asset recognition.
What is a finance lease?
A finance lease is a long-term, non-cancellable lease where substantially all the risks and rewards incidental to ownership of the asset are transferred to the lessee, although legal title may remain with the lessor.
How is the depreciation on a finance lease asset treated in lessee's books?
Lessee charges depreciation on the leased asset over its useful life.
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