1vpes of LeasinentroduotionO\ca:i:- oi lcasc. Olcasi:- is a :occssO|v w|ic| a ii:u ca: o|tai: t|c usc oi a cc:tai: iixcc assct Oio: w|ic| it uust ua|c sc:ics oi co:t:actual c:iocic taxcccucta|lc avuc:ts:lcasc :c:tals.Dcii:itio:.Olcasi:- is a co:t:actual a::a:-cuc:t . w|c:c OI|c ow:c: :lcsso: oi t|c Assct:lquiuc:tOI:a:sic:s t|c osscssio::i-|t to usc t|c Assct:lquiuc:t to a:ot|c::lcssccOlo: a: a-:ccc c:ioc oi tiuc i: :ctu:: io: :c:tal.efinition of LeasineOlcasi:- is a co:t:actual a::a:-cuc:t . w|c:c OI|c ow:c: :lcsso: oi t|c Assct:lquiuc:tOI:a:sic:s t|c osscssio::i-|t to usc t|c Assct :lquiuc:t to a:ot|c:usc: lcssccOlo: a: a-:ccc c:ioc oi tiuc i: :ctu:: io: :c:tal.OAt t|c c:c oi t|c c:ioc O t|c assct :cvc:ts to t|c lcsso:. o:O :ovisio: io: t|c :c:cwal oi t|c lcasc o:t:act. o:O otio: to t:a:sic: t|c ow:c:s|i to t|c lcsscc. ssential lements of Leasine!a:tics to a lcasc o:t:act. lssc:tiallv two a:tics Olcsso:is t|c ow:c: oi t|c assct t|at is |ci:- lcascc.Olcssccis t|c :cccivc: oi t|c sc:viccs oi t|c assct u:cc: a lcasc co:t:act.Olcsso: a:c lcsscc ca: |c l:civicual o: lc-allv :cco-:iscc a:tv.Olcasc |:o|c:|i- tic|ct lcascs usc |iu. O\ajo: !lavc:s i: lcasc \a:|ct.O la:|s l:cia: lo:ci-: llsO su|sicia:ics oi la:|slls.O :llsssential lements of LeasineOAssctu|jcct uattc: oi lcasi:- co:t:act. Autouo|ilcs. !la:t \ac|i:c:v. lquiuc:ts. la:c |uilci:-. lacto:v. a :u::i:- |usi:css. ai:c:ait. |is. ctc.Ow:c:s|i:cuai:s wit| t|c lcsso:Ouscoi t|c assctis allowcc to t|c lcsscc.Olcasc Ic:u !:iua:v scco:ca:v lcasc Ic:u.Olcasc kc:talsis t|c co:sicc:atio: io: t|c lcasc t:a:sactio:. o st:uctu:cc to :ccovc: t|c i:vcstuc:t cost. cu:i:- a-:ccc c:ioc.lassifioation of LeaseOli:a:cc lcasc a:c c:ati:- lcascOalc lcasc |ac| a:c Di:cct lcascOi:-lc l:vcsto: lcasc a:c lcvc:a-cc lcascODoucstic lcasc a:c l:tc::atio:al lcascinanoe LeaseDcii:itio: acco:ci:- to lA1.OI|c lcsso: t:a:sic:s to t|c lcsscc. su|sta:tiallv all t|c :is|s a:c :cwa:cs i:cicc:tal to ow:c:s|i oi t|c assct. w|ct|c: o: :ot t|c titlc is cvc:tuallv t:a:sic::cc.Ou|sta:tial kis| a:c kcwa:cs.i. w:c:s|i t:a:sic::cc to t|c lcsscc |v t|c c:c oit|c lcasc tc:u. 47ii. I|c lcsscc |as a: otio: to u:c|asc t|c assct at a :icc w|ic| is cxcctcc to |c suiiicic:tlv lowc: t|a: t|c iai: ua:|ct valuc. at t|c catc t|c otio: |ccoucs cxc:cisa|lc t|at. at t|c i:cctio: oi t|c lcasc. it is :caso:a|lv cc:tai: t|at t|c otio: will |c cxc:ciscc. 47inanoe LeaseO u|sta:tial :is| :cwa:cs :co:ti:uccO iii. I|c lcasc tc:u is io: a uajo: a:t oi t|c usciul liic oi t|c assct. O usciul liic uca:s. ui:iuuu oi. :a !|vsical liic.:| tcc|:olo-ical liic :|solctc. a:c :iii :ocuct ua:|ct liic. O I|c c:itc:iacutoii oi:t is t|at ii t|c lcasc Ic:u cxccccs . oi t|c usciul liic oi t|c cquiuc:t. it is a li:a:cc liic.inanoial LeaselV. I|c !:csc:t Valuc:!V oi t|c ui:iuuu lcasc !avuc:t::c:tals is -:catc: t|a:. o: su|sta:tiallv cqual to. t|c iai: ua:|ct valuc oi t|c assct at t|c i:cctio: oi t|c lcasc:cost oi cquiuc:t. OI|c cutoii oi:t is t|at t|c !V cxccccs 90 oi t|c lai: ua:|ct valuc oi t|c assct. O !V s|oulc |c couutcc |v usi:- a ciscou:t :atc cqual to t|c :atc oi iulicit i: t|c lcasc i: t|c casc oi lcsso: a:c t|c i:c:cuc:tal |o::owi:- :atc |v t|c lcsscc.Ol: l:cia: co:citio:. o:lv co:citio:s iii a:c iv a:c alica|lc. as co:citio:s l a:c ii auou:ts to li:c u:c|asc.Oli:a:cial lcasc is also |:ow: as lull !avout lcasc` a:c lcll o: li-| watc: clausc :lcasc.eatures of inanoial 3ervioeA Iinanciai Iease is st7:ct:7ed t4 inci:de:O %e Iessee seiects te eq:ipment meeting is 7eq:i7ementO %e Iessee neg4tiates te p7ice, deiive7 sced:ie, instaiiati4n, va77anties, maintenance, etc.O %e Iessee in47ms te ab4ve detaiis and Iess47 makes te pament di7ecti t4 te seiie7man:act:7e7 .dist7ib:t47.O %e eq:ipment is di7ecti deiive7ed t4 te Iessee b seiie7.O %e Iessee enj4s eci:sive and peace:ip4ssessi4n and :se 4 te eq:ipment.O Inte7s in t4 te Iease ag7eement vit Iess47.O %e Iess47 pas te am4:nt di7ecti t4 seiie7an:act:7e7.s:ppiie7.eatures of inanoial LeaseO %e Iessee ma be p74vided a 7igt 47 4pti4n , t4 p:7case te eq:ipment at a :t:7e date.%is p7actice is 7a7ei 4:nd in India.O Iease Pe7i4d - P7ima7 and sec4nda7.O P7ima7 iease Pe7i4dO c4ve7s signiicanti te ec4n4mic iie 4 te eq:ipment,O%e Iease is n4n-canceiiabie d:7ing p7ima7 pe7i4d i canceiied it att7acts ve7 eav penait.O Iess47 7ec4ve7s is investment ai4ng vit s4me p74it.O sec4nda7 pe7i4dO iease pe7i4d viii be s47te7 c4ve7ing 7esid:ai pe7i4d, i an,O Rentai viii be s:bstantiaii i4ve7, c4mpa7ed t4 ma7ket 7ate.peratine LeaseOIAs 19 deines Iease as an Gpe7ating Iease i it d4es n4t t7anse7 s:bstantiaii aii te 7isks and 7eva7ds incidentai t4 4vne7sipt4 te Iessee.ORisks O idie capacit 4 te eq:ipment,O%ecn4i4gicai 4bs4iescenceO Va7iati4ns in 7even:e t4 canges in ec4n4m.OReva7d -O P74itabie 4pe7ati4nO App7eciati4n in 7esid:ai vai:e 4 te asset. peratine LeaseO a7acte7istics 4 an Gpe7ating Iease:O%e Iease te7m is signiicanti iess tan te ec4n4mic iie 4 te eq:ipment.O%e Iessee enj4s te 7igt t4 te7minate te Iease at s47t n4tice vit4:t an signiicant penait.O%e Iess47 :s:aii p74vides te 4pe7ating kn4v-4v, s:ppiie7s 7eiated se7vice, and O :nde7takes te 7esp4nsibiiit 4 ins:7ing and maintaining 7epai7 and tecnicai se7vice te eq:ipment aiied as Wet Iease' 47 se7vice Iease, 47O Iessee bea7s te c4sts 4 ins:7ing and maintaining te eq:ipmentcaiied as D7 Iease'amples of peratine Lease O|a:tc:i:- oi Ai:c:aits a:c |is. alo:- wit| c:cw. iucl a:c suo:t sc:viccs :Wct lcasc.Oli:i:- oi ouutc:s :D:v lcasc a:c wit| c:ato:s a:c uai:tc:a:cc:Wct lcasc.Oli:i:- lusIaxis wit| D:ivc:s. io: a scciiic t:avcl o: io: a iixcc tc:u.t... . .o...1 . |o. o// |-./.1o. . o.-.-o-.. o-1 oo|..o o-1 ..o/. o.|.. 3ale and Lease baok and ireot Leasesaie and Iease back:O %e 4vne7Iessee 4 te eq:ipment seiis it t4 a Ieasing c4mpan Iess47.O %e Iess47,ieases te eq:ipment back t4 te Iessee.Di7ect Iease:O Bipa7tite Iease - Iq:ipment s:ppiie7-c:m-Iess47 and Iessee.O %7ipa7tite Iease saies-aid-Iease - Iq:ipment s:ppiie7, Iess47 and Iessee.OIq:ipment s:ppiie7 takes te iead, ONeg4tiates te te7ms and ente7s int4 Iease ag7eement vit Iess47and disc4:nting iease 7enais.OIeasing c4mpan 4vns te eq:ipment and 4btains an assignment 4 iease 7entai. Osaies-aid-Iease is vit 7ec4:7se t4 te s:ppiie7, t4 b:-back te eq:ipment.g:a7antee, in case 4 dea:it b te Iessee. 3inele nvestor Lease and Leveraeed Leasei:-lc l:vcsto: lcasc.W Gni tv4 pa7ties - Iess47 and Iessee. W Ieasing c4mpan Iess47 :nds te enti7e investment, aving app74p7iate mi 4 Iq:it-c:m-Debt.W Iinance 7aised b te Iess47, is vit4:t 7ec4:7se t4 te Iessee.Leveraeed LeaseIeve7aged Iease:Opa7ties t4 te t7ansacti4n.OIess47Iq:it invest47OIende7 OIessee. O %e Ieasing c4mpan Iq:it invest47, Ob:s te eq:ipment, t74:g s:bstantiai b4774ving, andOvit :ii 7ec4:7se t4 te Iessee and vit4:t 7ec4:7se t4 it.O %e Iende7 4btains an assignment 4 te Iease and a i7st m47tgage 4 te q:ipment.OA %7:stee viii act as an inte7media7 - 4n 7eciept 4 7entais,7emits debt pa7t t4 Iende7 and baiance t4 Iess47. ther tvpes of LeaseOl:tc::atio:al lcascOluo:t lcascO:oss|o:cc: lcascO\ajo: !lavc:s i: lcasi:- i:cust:v i: l:cia.Ol:ccc:cc:t lcasi:- coua:ics c:jov ii:a:cial tcc|:olo-ical colla|o:atio:.O:lls.O\a:uiactu:c:lcsso:s.Ola:|s a:c li:a:cial l:stitutio:s.Ol:|ousc lcsso:s.dvantaees of LeasineOIieibiiit- Iease 7entai ied s:iting te cas i4v 4 te IesseeIq:ated, stepped :p, Baii44ned and Dee77ed.Ouse7 47iented va7iants: :pg7ade Iease t4 beat 7isk 4 4bs4iescence 47 c74ss b47de7 iease 7isks, se7vice 7eiated iease, etc..O %a beneits: Iess47 sa7es te ta beneits vit Iessee -i4ve7 iease 7entais.OIess pape7 v47kand epediti4:s disb:7sementO 4nvenienceO100 inancingOBette7 :tiisati4n 4 i4cked :ndssa, 7eiease 4 4ice eq:ipments.OG-Baiance seet inancing.dvantaees of Leasine to LesseeOlasv a:c 100 li:a:ci:- oi aital -oocs.OA: accitio:al sou:cc oi li:a:ccOlcss costlvOw:c:s|i :csc:vccOAvoics cuu|c:souc l:stitutio:al ii:a:cc.Ollcxi|ilitv i: st:uctu:i:- oi :c:tals.Oiulicitv oi cocuuc:tatio: a:c tc:us.OIax |c:ciits.O|solcscc:cc kis|s avc:tccdvantaees of Leasine to LessorOlull sccu:itvas ow:c:s|i :ctai:ccOIax |c:ciitOli-| :oiita|ilitv OI:aci:- o: lquitvli-| Dc|t.lquitv katio.Oli-| -:owt| otc:tialLimitations of LeasineOkcst:ictio:s o: usc oi lquiuc:t:o accitio:saltc:atio:s.Oliuitatio:s oili:a:cial uscavout o|li-atio:s. |c:ciits oi wa::a:tics.Okcsicual valuc |c:ciit O o:scquc:ccs oi cciault oi tc:us |v lcsscc.Ou:cc:statcuc:t oi lcsscc`s Assct i: l.ODou|lc alcsIax. |ot| |v lcsso: :u:c|asc a:c lcsscc :at t|c tiuc oi lcasc.