Leasing A Piece Of Machinery Or Property

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Leasing a piece of machinery or property can be beneficial for a company or individual rather than a straight out purchase. This report will define a lease, the types, and benefits. While illustrating the difference between a lessee and the lessor, showing the implantations of tax benefits each party will be able to partake in. The third aspect that will be covered is the written agreement between the parties, and how these terms can be self-defining as to what type of lease in which the parties are agreeing to.
A lease is a “legal document outlining the terms under which one party agrees to rent property from another party. A lease guarantees the lessee (the renter) use of an asset and guarantees the lessor (the property owner) regular payments from the lessee for a specified number of months or years. Both the lessee and the lessor must uphold the terms of the contract for the lease to remain valid.” (Investopedia) With in the contracts the details of the agreement are laid out, for both the lessee and lessor. Within these documents and who they are written can determine what type of lease they are.
Lease Types
There are in general two types of leases. The first would be a capital lease which is a lease in which the lessor only finances the leased asset, and all other rights of the ownership transfer to the lessee (Accounting Tools). Within the parameters of the capital lease the lessor can only record the interest on the lease as an expense, while the asset itself

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