Question

Name and explain three advantages of leasing over outright purchase of an asset.

Answer 1

Leasing means taking an asset on leave rather than buying it outrightly.

Advantages of leasing are as follows:

1. Lease Payments are tax deductible. Tax Advantage is available on lease rentals paid.

2.Cost is spread over a period of time and in one time. Outright purchase will lead to outflow of funds in one time while leasing spreads it over a number of years.

3. Asset can be taken on lease for the required period of time and then return it to the Lessor. While in case of purchase, asset cannot be returned, it can only be disposed off at the price not known at the time of purchase.

answered by: anonymous