Welcome! | Ask A Question

 
 
 
 
Question

Asked 8/14/2010

What is a lease? Why would you choose to lease instead of buy a capital item? What steps would you follow to decide whether

What is a lease? Why would you choose to lease instead of buy a capital item? What steps would you follow to decide whether to lease or buy a computer system?

 
 
 
 
 
Answers

Answer 1/3 - Submitted 8/15/2010

A lease, as you are using it, is little more than a financing plan, at the end of which you don't own the equipment.
At one time, there was a considerable tax break when you leased equipment for your business instead of purchasing it. That reason may still be valid in some places and to some degree, but I would ask a tax professional.
Sometimes a lease is offered with a lower down payment than that of a conventional loan to make the same purchase.
Many people are under the mistaken impression that since they are leasing their computer, and don't own it, that the leasing company will pay for repairs and maintenance. This is a myth. It's nothing more than a finance plan, and even if you turn it back in at the end of the lease, it can be costly.

 
 

Answer 2/3 - Submitted 8/15/2010

In my opinion you should never lease depreciating items. Computers would be in that group. So would cars. The exception is paying rent on an apartment, for example, if you cannot afford to buy a house. Leasing is a good idea for businesses, but are a bad idea for individuals, from a financial perspective.

 
 

Answer 3/3 - Submitted 8/15/2010

It may be cheaper to lease than to buy. It depends on the terms.

 
 
 
 
Answer This Question Now

Type your Answer in the box below and post your answer.

Learn more about how this works

 
 

Capital Lease Related Topics

 

Related Questions (Ask a New Question)

 
Why have operating leases rather than capital leases?

Please explain operating leases. what are they? how do we account for them from both the lessor's and lessee's perspective? why have operating leases rather than capital leases? for that matter, why lease at all? what are the advantages of leasing?

See Answers

 
How should sales tax be treated? capitalized or expense?

We have a lease and we pay sales tax monthly along with our lease payment. what does gaap say about booking this?

See Answers

 
What is a lease? why would you choose to lease instead of buy a capital item? what steps would you follow to decide whether

What is a lease? why would you choose to lease instead of buy a capital item? what steps would you follow to decide whether to lease or buy a computer system?

See Answers

 
Related Questions

Why have operating leases rather than capital leases?


Please explain operating leases. what are they? how do we account for them from both the lessor's...

 

How should sales tax be treated? capitalized or expense?


We have a lease and we pay sales tax monthly along with our lease payment. what does gaap...

 

What is a lease? why would you choose to lease instead of buy a capital item? what steps would you follow to decide whether


What is a lease? why would you choose to lease instead of buy a capital item? what steps would...

 

How do you define working capital? what may happen if an organization neglected to manage its working capital? what techniqu


How do you define working capital? what may happen if an organization neglected to manage...

 

Capitalizing equipment leased from foreign company


I am interested to find out what is the proper value to use for capitalization of equipment...

 

How do you account for interim rent on an equipment lease?


Prior to the beginning of the base lease term, we will incur approximately one month of interim...

 
 

See more Capital Lease questions

 
 
 
 

Categories

 
 
 

Ask A Question

Ask a new question about
Capital Lease: