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What is a lease?
A lease is a long term agreement to rent equipment, land, buildings, or any other
asset. In return for most - but not all - of the benefits of ownership, the user (lessee)
makes periodic payments to the owner of the asset (lessor). The lease payment
covers the original cost of the equipment or other asset and provides the lessor a
profit.
A lease arrangement involves a lessor conveying the right to a lessee to
use a leased asset for an agreed period of time in return for a series of
payments [IAS17.3] [SIC-27.5]
Types of leases
There are three major kinds of leases: the financial lease, the operating lease, and
the sale and leaseback.
A financial lease is usually written for a term not to exceed the economic life of the
equipment. You will find that a financial lease usually provides that: Periodic
payments be made, Ownership of the equipment reverts to the lessor at the end of
the lease term, The lease is non-cancelable and the lessee has a legal......

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Approximate Word Count: 466
Approximate Pages: 2 (250 words per double-spaced page)

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