Hey. In simple language, if I say what is a finance lease agreement? An agreement that gives a lessee the use of an asset for the majority of its economic life, much like ownership, is a financial lease agreement. With this kind of lease, the lessee can buy the asset at the conclusion of the lease period.
What is the Meaning of Finance Lease?
A finance lease agreement means a capital lease. It is a type of lease where the lessee (the party leasing the asset) gains substantial control and benefits of ownership, even though the lessor (the party providing the asset) gets back legal ownership.
Here are a few features of a finance lease agreement:
The lessee can use the asset for most of its useful life.
They record the leased asset as a fixed asset on their balance sheet.
The lease term is typically long and may cover most of the asset's useful life.
The lessee can purchase the asset at the end of the lease term. They are usually responsible for maintaining and repairing the asset.
Finance leases are used for high-value assets such as machinery, equipment, and vehicles.
I hope you found this helpful.
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What is a Finance Lease Agreement?
Hardik56
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8 months
2025-03-19T14:13:53+00:00 2025-03-19T14:13:53+00:00Comment
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