AIOU SOLVED ASSIGNMENT 2 CODE 444 ADVANCED ACCOUNTING
On the other hand, direct lease is a simple lease where
the asset is either owned by the lessor or he acquires it. In the former case,
the lessor and equipment supplier are one and the same person and this case is
called “bipartite lease”. In bipartite lease, there are two parties. Whereas,
in the latter case, there are three different parties viz. equipment supplier,
lessor, and lessee and it is called tripartite lease. Here equipment supplier
and lessor are two different parties.
SINGLE INVESTOR LEASE AND LEVERAGED LEASE:-
In single investor lease, there are two parties’ lessor
and lessee. The lessor arranges the money to finance the asset or equipment by
way of equity or debt. The lender is entitled to recover money from the lessor
only and not from the lessee in case of default by lessor. Lessee is entitled
to pay the lease rentals only to the lessor.
Leveraged lease, on the other hand, has three parties –
lessor, lessee and the financier or lender. Equity is arranged by the lessor
and debt is financed by the lender or financier. Here there is a direct
connection of the lender with the lessee and in case of default by the lessor;
the lender is also entitled to receive money from lessee. Such transactions are
generally routed through a trustee.
DOMESTIC AND INTERNATIONAL LEASE:-
When all the parties of the lease agreement reside in the
same country, it is called domestic lease. International lease are of two types
– import lease and cross border lease. When lessor and lessor and lessee reside
in same country and equipment supplier stays in different country, the lease
arrangement is called import lease. When the lessor and lessee are residing in
two different countries and no matter where the equipment supplied stays, the
lease is called cross border lease.
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