Lease Finance and Hire Purchase
Chapter notes, video classes, MCQ practice tests and quick-revision one-liners for Indian Economy and Indian Financial System — JAIIB.
One-liners from this chapter
Free sample — 8 of 49 rapid-fire Q&A cards.
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
Maintenance — Finance Lease / Operating Lease?
Finance Lease: Usually with lessee; Operating Lease: Usually with lessor
Purchase option — Finance Lease / Operating Lease?
Finance Lease: Often a bargain purchase option; Operating Lease: Typically absent
Economic substance — Finance Lease / Operating Lease?
Finance Lease: Hire-purchase-like financing; Operating Lease: Pure rental
Lessor?
entire lease rental received is taxable as business income.
MCQ practice tests
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PDF study notes
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