![]() ![]() These contracts are usually short-term, and it is up to the lessee to maintain the equipment throughout the period of payments. Example of a finance lease: leasing a printerĪn operating lease is a contract that involves periodical payments for the use of equipment which remain in the ownership of the lessor (original owner of the equipment). Finally, ownership options may be available once the lease has been terminated, at the end of the minimum lease term.Ĭapital lease is another name for a finance lease, and they are often used interchangeably, although finance lease is now considered the standard and correct terminology in accounting. ![]() This kind of contract usually extends over a long period of time in which the user of the equipment has to maintain and take care of all the assets.Īt the end of the asset leasing period, you can hand the equipment back and upgrade to the latest technology, or extend the lease period for continued use of the current equipment. A finance lease, 'financial lease' or 'capital lease' is typically a full pay-out agreement this means that the sum of the rentals includes the full capital cost of the equipment, plus the interest accrued.Ī finance lease allows for the payments to be spread over the lease term, while also providing flexibility at the end of the contract. ![]()
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