Chapter 5
Leasing Overview
I. Meaning of leasing
(1) General lease InterpretationLeasing refers to giving your items to others for use and receiving a certain amount of compensation, or occupying others' items and paying a certain amount of money.
(2) further understanding of leasingTo further understand the lease, we must understand the characteristics of the lease: 1. The lease of the lease owner has two basic clients, that is, the lessor and the lessee 2. Not all items that can be used to transfer the lease subject can be used as the subject matter of the lease. The items subject to the lease must be of the following nature: (1) the items subject to the lease must be physical property, and the intangible assets cannot be used as the subject matter of the lease; (2) the original form can still be maintained after the lease objects are used; (3) Rental items should be items that can be used independently. 3. term of lease the term of lease is the term of lease. It is the term of time for the lessor to sell objects to the lessee. The longer the lease term, the more compensation the lessor receives. 4. The rental fee is also called the rent, which is the price paid by the lessee for obtaining the right to use the rental items during the lease period.
Ii. Leasing Classification1. From the perspective of private law: leasing is divided into traditional Leasing and Financial Leasing 2. From the accounting perspective: leasing is divided into financial leasing and business leasing 3. From the tax perspective: leasing can be divided into tax-saving leasing and non-tax-saving leasing 4. From the perspective of leasing transaction business specifications: leasing can be divided into direct leasing, leasing, leasing back, leveraged leasing 5. From the perspective of leasing subject: leasing can be divided into movable property leasing, equipment leasing, real estate leasing, house leasing, land leasing, aircraft leasing, car leasing, computer leasing, etc.
Iii. Major leasing forms
(1) traditional leasing, financial leasing and business leasing1. Traditional leasing is generally referred to as the rental service. It features (1) A simple lease relationship involving only two parties: the lessor and the lessee; (2) the purpose of leasing by the lessee is generally to use rental properties temporarily and temporarily. (3) The choice of rental properties is determined by the lessor, and the investment losses incurred when rental properties cannot be rented are borne by the lessor; (4) rental payment is not fully paid, that is, the rent charged by the lessor for the lease of a tenant is only part of the rent of the lessor, either in full or in large part; (5) the lessor provides the lease price to the lessee, it also provides comprehensive services such as maintenance and repair of rental properties. (6) The lease contract can be canceled midway through (7) When the lease period ends, the lessee can rent out or renew the lease (8) during accounting, the lease is not included in the lessee's balance sheet. 2. The financial lease is used by the lessor to purchase the rental goods from the seller and provide the goods to the lessee based on the choice of the seller and the lease, the lessee pays the rent. It features: (1) Financial Leasing generally involves three parties: the lessor, the lessee and the supplier (2) sign two contracts. The lessor signs a lease contract with the lessee. The lessor signs a purchase contract with the supplier. (3) The lessee's lease is mainly used for medium-and long-term financing. The lease term is basically the same as that of equipment. (4) the right of the lease property is determined by the lessee. The lessee shall bear risks such as equipment defects and technical backwardness related to the lease property. When the seller fails to perform the purchase contract, the lessee shall make a claim (5) lease payment is fully paid or paid off in full (6) maintenance of rental properties is undertaken by the lessee (7) the lease contract cannot be canceled midway (8) when the lease term ends, the lessee can return, renew, or retain the lease (9). The lease items should be included in the lessee's balance sheet. 3. The business lease is a special financial lease, it has its own characteristics: (1) The business lease involves three parties: the lessor, the lessee and the supplier, two contracts, the lease contract and the purchase contract (2) the purpose of the lessee's lease is still to carry out medium-and long-term financing. The lease term shall be shorter than the equipment's durability period. (3) The right of the lease term shall be determined by the lessee, but the lessor shall have the right of veto (4) rental payment is not fully paid (5) Maintenance of rental properties can be performed by either the lessee or the lessor (6) the lease contract can be terminated midway (7) When the lease term ends, the lessee may revoke, renew, or retain (8) the lease items can be included in either the lessee's balance sheet or
(
Ii) Tax-saving leasing and non-tax-saving Leasing1. Tax-saving leasing is also called real leasing. It can truly enjoy the lease benefits in taxation. 2. Non-tax-saving leasing is called rental purchase in the UK and conditional sales leasing in the United States. In terms of taxation, it is regarded as a sales transaction and enjoy the same tax treatment as the sales transaction.
(3) leveraged leasingLeveraged leasing is a financing tax-saving lease. In leveraged leasing, the lessor generally obtains the ownership of equipment as long as it provides 20% of the total amount of equipment-40% of the investment, and has a tax discount on equipment investment. Leveraged leasing is mainly used for long-term leasing of capital-intensive equipment, such as leasing of aircraft, oil drilling platforms, satellite systems, etc.
(4) Direct leasing, subleasing, and leaseback (after-sales leasing)1. Direct Leasing: The lessor purchases equipment from the supplier with funds raised from the financial market, and then directly rents the equipment to the lessee, equipment payment items are raised by the lessor on its own. 2. A lease-to-lease operator first rents equipment from another leasing company, then rent it to the lessee. 3. Rent-back refers to the process in which the lessee sells its own items to the lessor and signs a financial lease contract with the lessor, the lease form for renting the object from the lessor.
Iv. Leasing Functions
(1) Functions of the lessee1. Financing 2. Reducing Capital Occupation 3. Improving Capital Liquidity 4. Off-Table financing 5. Avoiding Risks of outdated equipment 6. Obtaining professional management services
(2) Functions of the lessor1. Reduce investment risks, expand investment scale 2. Expand product sales
