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finance lease vs financial leasing

Both "finance lease" and "financial leasing" are correct phrases that refer to the same concept in the field of accounting and finance. They are interchangeable and can be used based on personal preference or regional conventions.

Last updated: March 27, 2024

finance lease

This phrase is correct and commonly used in the field of accounting and finance.

This term refers to a type of lease where the lessee is responsible for maintenance, insurance, and other expenses associated with the leased asset. It is a common term in accounting and finance.

Examples:

  • The company opted for a finance lease to acquire the new machinery.
  • The finance lease agreement outlined the terms and conditions of the lease.
  • A finance lease allows the lessee to have the benefits and risks of ownership.
  • The finance lease period is usually long-term.
  • The accounting treatment of a finance lease differs from an operating lease.
  • Under IFRS or compatible National GAAP, 'finance lease receivables' are as defined in IAS 17.
  • The present finance lease meets this requirement.
  • On 21 September 2005 the Commission signed a 27 year finance lease contract for a building in Brussels valued to EUR 50 million.
  • The result had been that the total finance lease liability had been understated at 31 December 2002 by EUR 188.6 million.
  • The cost of an item of property, plant and equipment held by a lessee under a finance lease is determined in accordance with IAS 17.
  • For example, it may be appropriate to depreciate separately the airframe and engines of an aircraft, whether owned or subject to a finance lease.
  • An operating lease is a lease other than a finance lease.
  • In the case of a finance lease, the underlying asset may be either tangible or intangible.
  • After initial recognition, a lessee accounts for an intangible asset held under a finance lease in accordance with this standard.
  • The finance lease was provided by a private US bank [...] to finance the acquisition of five B787 aircraft.
  • In view of the above, the finance lease can be considered as a sign that markets believed in LOT's return to viability.
  • The finance lease alone accounts for [60-67] % of total restructuring cost and thus would be sufficient to meet the required threshold.
  • For example, it may be appropriate to depreciate separately the airframe and engines of an aircraft, whether owned or subject to a finance lease.
  • property that is leased to another entity under a finance lease.
  • cash payments by a lessee for the reduction of the outstanding liability relating to a finance lease.
  • A finance lease is a lease that transfers substantially all the risks and rewards incidental to ownership of an asset.
  • The costs identified as directly attributable to activities performed by the lessee for a finance lease are added to the amount recognised as an asset.
  • A finance lease gives rise to depreciation expense for depreciable assets as well as finance expense for each accounting period.
  • Lessors shall recognise assets held under a finance lease in their balance sheets and present them as a receivable at an amount equal to the net investment in the lease.
  • If a sale and leaseback transaction results in a finance lease, any excess of sales proceeds over the carrying amount shall not be immediately recognised as income by a seller-lessee.

Alternatives:

  • financial leasing
  • capital lease
  • lease financing
  • lease-purchase agreement
  • equipment lease

financial leasing

This phrase is correct and can be used interchangeably with "finance lease" in the field of accounting and finance.

This term also refers to a type of lease where the lessee bears the risks and rewards of ownership of the leased asset. It is a valid term used in accounting and finance.

Examples:

  • The company decided to enter into a financial leasing arrangement for the new office space.
  • Financial leasing provides the lessee with the option to purchase the asset at the end of the lease term.
  • The financial leasing agreement included details about the residual value of the asset.
  • The benefits of financial leasing include off-balance sheet financing.
  • The accounting treatment of financial leasing impacts the lessee's financial statements.
  • All payments regarding financial leasing should be excluded from variable 13 41 1.
  • Annual payments for assets used under financial leasing should be excluded.
  • In fact, this advantage is only available on condition that the vessel is acquired through a financial leasing contract previously authorised by the tax administration.
  • As mentioned in Section 4.3 above, Spain and certain third parties consider that there are only two measures involved: first, the provisions of Article 115 TRLIS concerning the deduction of the cost of an asset acquired via a financial leasing contract.
  • In cases of financial leasing a change of ownership is assumed.
  • Most of the new additions are newly manufactured aeroplanes being leased in on a financial leasing basis.
  • the acquisition of fixed assets by financial leasing.
  • The value of tangible goods acquired through financial leasing is not referred to in the IVth Accounting Directive.
  • Relationship with the Unidroit Convention on international financial leasing
  • financial leasing and hire-purchase agreements (67);
  • financial leasing (a change of ownership is then imputed);
  • For financial leasing, its market share was negligible in 2008, amounting to a mere 0,03 %.
  • - for AFIN: financial leasing and stock financing for Iveco vehicles in Czech Republic, Slovak Republic, Hungary, Estonia and Lithuania.
  • As already mentioned, the Spanish authorities have confirmed that the tax administration only considered this condition actually to be fulfilled if a financial leasing contract had been authorised in the context of an application for early depreciation pursuant to Article 115(11) TRLIS.
  • Corporations specialising in financial leasing (5), factoring, mortgage lending and consumer lending are to be included in this category.
  • Operational leasing: leasing contracts other than financial leasing (see note (c)).
  • For the goods acquired via financial leasing the value is to be recorded at the time when the good is delivered to the lessee.
  • The services concerned under this heading are described as covering lending, i.e. (third party) mortgages and loans, consumer credit, and financial leasing.
  • (7) For statistical purposes, leasing is defined as financial leasing when the leasing period covers all or most of the economic lifetime of the durable good.
  • Moreover, the limitation to leased assets does not constitute an element of selectivity as the acquisition of any assets can be financed through financial leasing contracts which are generally accessible to companies of all sectors and sizes.

Alternatives:

  • finance lease
  • capital lease
  • lease financing
  • lease-purchase agreement
  • equipment lease

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