Class 11 NCERT Solutions: Chapter 6 Social Responsibilities of Business and Business Ethics Exercise 6.2 (Business Studies), Class 11 NCERT Solutions: Chapter 11 International Business Exercise 11.2 (Business Studies), Class 11 NCERT Solutions: Chapter 5 Emerging Modes of Business Exercise 5.1 (Business Studies), Class 11 NCERT Solutions: Chapter 2 Forms of Business Organisation Exercise 2.3 (Business Studies), Class 11 NCERT Solutions: Chapter 4 Business Services Exercise 4.1 (Business Studies), Class 11 NCERT Solutions: Chapter 9 MSME and Business Entrepreneurship Exercise 9.2 (Business Studies), Class 11 NCERT Solutions: Chapter 9 MSME and Business Entrepreneurship Exercise 9.1 (Business Studies), Class 11 NCERT Solutions: Chapter 11 International Business Exercise 11.1 (Business Studies), CBSE Class 12 Business Studies Solved Question Paper- 2020 Set 1, CBSE Class 12 Business Studies Solved Question Paper- 2020 Set 2, A-143, 9th Floor, Sovereign Corporate Tower, Sector-136, Noida, Uttar Pradesh - 201305, We use cookies to ensure you have the best browsing experience on our website. Explain the merits and demerits of trade credit. Introduction to Leasing. Either party to the lease may termite the lease after giving due notice of the same since the asset may lease out to other willing leases. The asset is available for use immediately without loss of time in applying for the loan, wanting for approval and sanction, etc. The lease rental for the secondary period is much smaller. Typically, it is easier to obtain lease financing than loans from commercial lenders. Under lease financing, lessee is given the right to use the asset but the ownership lies with the lessor and at the end of the lease contract, the asset is returned to the lessor or an option is . DMCA Policy and Compliant. TOS 7. Lease Rentals: This refers to the consideration received by the lessor in respect of a transaction and includes: At present there are many leasing companies such as 1st Leasing Company, 20th Century Leasing Company which are doing quite a lot of business through leasing, It has become an important financial service and a lucrative avenue of making sizable profits by leasing companies. Types, Features, Benefits, Input Tax Credit, GST Council, Role of Commerce and Industry Associations in Promotion of Internal Trade, International Business: Meaning, Reason, Scope, and Benefits, Difference between International Trade and International Business, Difference between Domestic Business and International Business, Modes of Entry into International Business, Exporting and Importing Meaning, Advantages and Disadvantages, Contract Manufacturing: Meaning, Advantages, and Disadvantages, Advantages and Disadvantages of Licensing and Franchising, Wholly Owned Subsidiaries: Meaning, Advantages, and Disadvantages, Foreign Trade Promotion Measures and Schemes, Organisational Support in International Business, International Monetary Fund (IMF): Objectives and Functions, World Trade Organisation (WTO): Features, Functions and Objectives, Partnership: Features, Merits and Demerits, Warehousing Services: Meaning, Types and Function. This article is being improved by another user right now. 2. As the costs go up over five years, you still pay the same rate as when you began the lease, therefore making your dollar stretch farther. Thus the assets, are freely available for raising additional funds from any other sources. Explain its merits and demerits. The recent development in economic liberalization, the cross border leasing is gaining greater importance in areas like aviation, shipping and other costly assets which base likely to become absolute due to technological changes. Now, IFCI, IDBI, ICICI, State Bank of India, SIDCs, Sundaram Finance and other entities are running leasing companies in our country. It is estimated that leasing industry in the USA finances about 25 per cent of capital goods acquisition. Report a Violation, Lease Financing: its Meaning and Forms of Lease Financing, 7 Methods of Issuing Corporate Securities | Financial Management. Download the PDF Question Papers Free for off line practice and view the Solutions online. 2. Description was written based on literature studies on the issues of lease. What does a Lease (Leasing) mean? The eighth chapter of Class 11th Business Studies is Sources of Business Finance. One of the reasons for the popularity of leasing is the steady stream of new and improved technology. The cost of debt capital, represented by debentures is lower than the cost of preference or equity capital. The period of the operating lease is generally shorter than the economic life of the leased asset, and. International Business: Meaning, Reason, Scope and Benefits, Contract Manufacturing: Meaning, Advantages and Disadvantages, Joint Ventures: Meaning, Advantages and Disadvantages. The person then typically has to return the item at the end of the leasing time (typically a year). When you get a PersonalRead More Personal Injury Lawyer Birmingham AL claims your Hurt, Thinking about hiring a private criminal defense attorney or lawyer?Read More Qualities to Seek in a Private Criminal Defense Attorney Lawyer, Speed Car Accidents; Speeding accounts for nearly 33% of allcarRead More Speed Car Accidents: What You Need to Know, Why do we need a Personal Injury Lawyer and whatRead More 6 Reasons to Work with a Personal Injury Lawyer. Do you agree with this view ? Lease financing is an important source of finance for modernisation and diversification of the firm. 3. Use and control over assets 1.5 5. How do we commonly perform brain activity research? The lender is usually a financial institution or a commercial bank. Lease financing is famous for which kind of activities? Preference shares are particularly useful for those investors who want higher rate or return with comparatively lower risk. Restrictions involved in long-term borrowing from financial institutions are avoided. It contains well written, well thought and well explained computer science and programming articles, quizzes and practice/competitive programming/company interview Questions. }]}. The risk of obsolescence and responsibility for maintenance are to be borne by Lessee, and. Financial lease is commonly used in case of land and buildings and very expensive equipment. The owner of the asset is called lessor and the user is called lessee. acknowledge that you have read and understood our. A lease contract will specify how much you pay each month, as well as what happens at the end of your contract. They have to furnish the following information: 1) Name and address of the lessee. For example, alternation and modification in assets may not be allowed. (4)Improvement in Liquidity: Leasing enables the lessee to improve their liquidity position byadopting the sale and lease back technique. Such an arrangement is adopted when the firm faces shortage of funds. ","acceptedAnswer": {"@type": "Answer","text":"With respect to the automobile industry, leasing a vehicle is a great option for those who may only be looking to buy a car for a few years. The lessor bears the risk of obsolescence and incidental risks. The notes contain 11 chapters covering every important topic, like Business, Commerce, Forms of Business Organisation, Business Services, Business Finance, Social Responsibility, Business Ethics, International Business, and many more. Leasing is a preferred means of financing for certain businesses. Advantages and Disadvantages of Lease Financing Grant says, " Why own a cow when the milk is so cheap? Explain the merits and demerits of retained earnings. - BYJU'S You typically have an option to buy equipment at end of lease term. Advantages and Disadvantages of Leasing Table of Contents 1 Advantages or benefits of Leasing to lessee 1.1 1. Leasing is a preferred means of financing for certain businesses. Other important topics covered in the notes are Import and Export Procedure, World Bank, IMF, WTO and Foreign Trade Promotion Measures and Schemes. This enables the company to save the long-term funds that can be utilized for other purposes. There are different ways through which an organisation can do business. : Leasing enables the lessee to plan its cash flows properly. The period of use is called the lease period afterwhich the lessee may opt for purchase of the asset. This helps a business to maintain a steady cash-flow profile. I got this web page from my friend who shared with me regarding thisweb page and at the moment this time I am visiting this website and reading veryinformative posts at this place. Large retention of earnings over a long period of time may cause dissatisfaction among shareholders as they do not receive the expected rate of dividend. It is a medium term fund. Are you interested in Mr Taxman looking after your income tax return or accounting for you, your business or your SMSF? Solution Meaning of Lease Financing Lease financing is a contractual agreement between the owner of the asset who grants the other party the right to use the asset in return for a periodic payment and the other party who is the user of such assets. Leasing was introduced in the United States of America during 1940s and 1950s. Discuss nature and significance of Business Finance. She is an educator by choice and enjoying her job. ","acceptedAnswer": {"@type": "Answer","text":"Leasing is when a person pays a certain amount of money for the use of an item. Explain its merits and demerits. Lessor: The party who is the owner of the equipment permitting the use of the same by the other party on payment of a periodical amount. This is known as sale and lease back system. The 'lessor' is the owner of the party and the 'lessee' is the party . As new equipment becomes available you can upgrade to the latest models each time your lease ends. Lease rentals are deductible from taxable income. Main disadvantages of leasing are as follows: The leasing is efficient only if the equipment or assets can be operated over the whole period of the contract; not using this equipment over the whole period of the contract, mainly due to the lack of production or orders, leads to losses for the beneficiary. Advantages of Leasing to the Lessee 2. Advantages and Disadvantages of Lease The lessee is not to provide or pay any margin to Manufacturer, Lessor and Lessee. 6. If earning declines and the financial condition of the company deteriorates, the company can omit to pay the dividend. Leasing Advantages And Disadvantages: Leasing a commercial property or even a vehicle is generally a better option than buying one, and the benefits are many. 2. It is used more frequently with items like computers and electronic items which become obsolete soon. EVERY MAKE & EVERY MODEL. Such as repairs, maintenance, insurance, etc. Merits. The important merits of lease financing are as follows: (i) It enables the lessee to acquire the asset with a lower investment; (ii) Simple documentation makes it easier to finance assets; (iii) Lease rentals paid by the lessee are deductible for computing taxable profits;
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