It is a partial payment for using the equipment during a partial month, and will be billed to the lessee on the first invoice. A contract in which one party conveys the use of an asset to another party for a specific period of time at a predetermined rate. The periodic payment to a lessor for the use of assets. A maximum amount of funding designated by the lessor for a lessee to use over a fixed commitment period. The lessor receives the tax benefits of ownership.
Lenders receive no tax benefits from the lease but receive a fixed rate over a long term.
A lease in which the cash flows will not be sufficient to cover the full costs of the equipment, the costs of financing, the costs of administration and to provide a satisfactory return. The lessor looks to the residual to realize profit. Leases are generally footnoted. A lease which includes a provision for extending payments under the lease on predetermined terms after a set period of time. These are generally used for short term leases of equipment.