Concepts of lease with clear explanation.

2. INTRODUCTION
- A lease is an agreement Where by the lessor conveys
to the lessee, in return for rent, the right to use an
asset for an agreed period of time.
- A financing arrangement that provides A firm with an
advantages of using an asset, without owning it, may
be termed as leasing.

3. MEANING OF
LEASING
Leasing is an agreement or
contract between lessor and
lessee, where the owner (lessor)
provides the asset and gives the
right to use the asset to the
user (lessee) in return for a
number of specified Payments
(lease rentals) over an agreed
period of time.
The lessor and the

4. DEFINITION OF LEASING
“ Lease is a contract, where by the owner of an
asset (lessor) grants to another party (lessee) the
exclusive right to use the asset usually for an
agreed period of time in return for payment of
Rent.
-James C. V
Vanhore

5. 1. Two parties : The two parties- owner of asset called lessor and
user of asset called lessee, lessee can be any individual,
Partnership firm, Companies or financial Institution's.
2. Asset : Asset can be Machinery, Land, Building, Equipment,
Vehicles etc..
Operating lease : Asset is selected and purchased by lessor.
Financial lease :Asset is selected by lease and purchased by lessor.
3. Period Of lease : As per the contract act, every contract should
have a specified
Lease period.
Operating lease : The lease is extendable, if required.
Financial lease : The lease period is always equal to the life of
asset.
Essentials of
leasing

6. 4. Lease rentals : As per sec 25 of the Indian contract act,
1972, an agreement without consideration is void. The
lessee to the lessor for using asset is know as ‘ lease
rentals’.
Operating lease : The value of the asset is
recovered over
the life of asset by giving the asset on lease to
different
People.
Financial lease : The lessor recovers the value
of asset
from a singal person ( lessee).

7. ASPECTS OF
LEASING
Legal
As per the laws and rules
of the statute
Financial
Accounting treatment of
lease in financial
Tax
Tax and IT provides

8. 1. Legal aspects.
Transfer of property act 1872
Indian Registration act 1899
Indian contract act 1972
2. Financial Aspects
Accounting treatment of operating lease
a. In the books of lessor
b. In the books of lessee
Accounting treatment of Financial lease
a. In the books of lessor
b. In the books of lessee
3. Tax provisions
a. Sales Tax provisions
b. IT provisions
1. lessor 2. Lessee

9. Types of leasing
On the basis of
Risk
Transferability
On the basis of
Approachability
On the basis of
Domicile of parties
On the basis of
funds raised
On the basis of
energy provided
Financial
lease
Operating
lease
Sale and lease
back
Single
investor
lease
Domestic lease
Import lease
Dry lease
Cross Border
lease
Direct lease
Leverage
lease
International
lease Wet lease

10. ADVANTAGES OF LEASING
1. Conserve Capital
2. 100% Finance
3. Off the balance sheet asset
4. Benefits of Tax shields
5. Low Risk of Obsolescence risk
6. No ownership dissolution
7. Convenience

11. DISADVANTAGES OF LEASING
1.No benefit to residual value
2. High cost of leasing
3. No benefit of ownership
4. Not flexible
5. Disputes

12. CONCLUSION
A lease is A vital financial and
contractual arrangement that allows
individuals and business to access
funds without ownership.

13. Thank you