Revision Bitesize Special Lease Accounting

Revision Bitesize Special Lease Accounting Questions

What is the definition of the following terms:

1)  Finance Lease

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2)  Operating Lease

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3)  Hire Purchase Agreements

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Revision Bitesize Special Lease Accounting Answers

1)  This is an agreement whereby the lessee enjoys substantially all the risks and rewards associated with ownership of an asset other than legal title.

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2)  An agreement whereby the lessor retains the risks and rewards associated with ownership and normally assumes responsibility for repairs, maintenance and insurance.

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3)  These are legal agreements by which an organisation can obtain the use of an asset in exchange for payment by instalment.

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