Equipment Leasing & lease financing
Chapter notes, video classes, MCQ practice tests and quick-revision one-liners for Accounting and Financial Management for Bankers — JAIIB.
One-liners from this chapter
Free sample — 8 of 66 rapid-fire Q&A cards.
What is equipment leasing in the context of banking and finance?
Equipment leasing is a contractual arrangement where the lessor (owner) grants the lessee the right to use an asset for a specified period in exchange for periodic rental payments, without transferring ownership.
What is the 'primary period' in a lease agreement?
Initial non-cancellable period during which lease rental is paid.
What is the key difference between a finance lease and an operating lease?
A finance lease transfers substantially all risks and rewards of ownership to the lessee, whereas an operating lease does not transfer ownership risks and is essentially a rental arrangement for a shorter term.
What is a 'secondary period' in equipment leasing?
Optional renewal period after the primary lease term expires.
Who is the 'lessor' in a lease financing arrangement?
The lessor is the owner of the asset who grants the right to use it to another party (lessee) in exchange for lease rentals over the agreed lease period.
What is the 'right of use asset' under Ind AS 116 for lessees?
An asset representing lessee's right to use leased item over lease term.
What is meant by 'lessee' in a lease agreement?
The lessee is the party who obtains the right to use the leased asset for a specified period by paying periodic rentals to the lessor, without acquiring ownership of the asset.
What is 'lease liability' recognised by the lessee under Ind AS 116?
Present value of future lease payments discounted at implicit or incremental borrowing rate.
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