Lease Finance
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RTI,Chennai Learning Objective Given the overview of the concepts of the lease finance the learner will obtain a perspective of the principle of leasing finance which will make him aware of all the provision in this regard so has to enable him to conduct the audit thereon effectively.
Transcript of Lease Finance
RTI,Chennai
Learning ObjectiveGiven the overview of the concepts of the lease finance the learner will obtain a perspective of the principle of leasing finance which will make him aware of all the provision in this regard so has to enable him to conduct the audit thereon effectively.
RTI,Chennai
LEASE Definition & nature Parties to lease Terms of lease
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RULES & REGULATIONS GOVERNING LEASING COMPANIES
Capital adequacy standards Acceptance of deposits by NBFCs
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TYPES OF LEASES Sale & lease back Operating lease Financial or capital lease Leveraged lease
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Financial effects of lease. Accounting for lease Functions of the parties in respect
of leveraged lease.
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ADVANTAGES OF LEASING Short term Full funding Simplicity Reduced cost of borrowing Tax benefits Dilution of equity Restrictive conditions
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DISADVANTAGES OF LEASING Forfeiture of tax benefits of
ownership Loss of residual value Cost ineffectiveness Lease rentals
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EVALUATION OF LEASE FINANCE Capital Budgeting techniques Present value & Internal Rate of
Return Cash flow estimates
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BORROWING Vs LEASE FINANCE
Net advantage of leasing =Total Present Value cost of Borrowing –Total Present cost of leasing
