Management and Organizational Studies 3361A/B Study Guide - Final Guide: Executory Contract, Finance Lease, Operating Lease

• School: Western University
• Department: Management and Organizational Studies
• Course: Management and Organizational Studies 3361A/B
• Professor: Megan Elizabeth Clements

Document Summary

Leasing is popular because it is a cost-effective way of financing property and equipment. This is especially true for items that become obsolete quickly. Fro(cid:373) a(cid:374) a(cid:272)(cid:272)ou(cid:374)ti(cid:374)g sta(cid:374)dpoi(cid:374)t, leases ha(cid:448)e (cid:271)ee(cid:374) (cid:272)o(cid:374)tro(cid:448)ersial (cid:271)e(cid:272)ause (cid:373)a(cid:374)(cid:455) are (cid:862)off (cid:271)ala(cid:374)(cid:272)e sheet(cid:863) Standard setters have been concerned about this lack of transparency for many years. A lease is a contractual agreement between the lessor and the lessee. The lease gives the lessee the right to use the specific property (owned by the lessor) The lease specifies also the duration of the lease and rental payments. The obligations for taxes, insurance, and maintenance (executory costs) may be assumed by the lessor or the lessee or divided between the 2. In canada, there are 3 main types of lessors: Subsidiaries whose main business is leasing (e. g. honda canada finance) Rate charged is fixed for the term of the lease. Lease may be structured to meet different needs (e. g. cash flow)