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AS 19
Accountancy
Difference between loan and financial lease?
Answers (5)
Loan is borrowing of money required for funding the asset and the borrower uses the money for buying the asset. Under Finance lease finance company is the legal owner of an asset, and the user rents the asset for an agreed-upon period of time. The option to purchase the leased asset at a lower price than the fair value of the leased asset is given to the lessee. The legal ownership of the leased asset transfers from the lessor to the lessee at the end of the lease.
Sudha Reddy
Loan is borrowing of money required for funding the asset and the borrower uses the money for buying the asset. Under Finance lease finance company is the legal owner of an asset, and the user rents the asset for an agreed-upon period of time. The option to purchase the leased asset at a lower price than the fair value of the leased asset is given to the lessee. The legal ownership of the leased asset transfers from the lessor to the lessee at the end of the lease.
Can leasee choose not purchase the asset? If so,then what will be the fair value?
Thread Starter
N.GokulnathCan leasee choose not purchase the asset? If so,then what will be the fair value?
Can you elaborate your query?
CA Suraj Lakhotia Admin
Can you elaborate your query?
In financial lease,is it compulsory that leassee compulsorily purchase the asset