What Are The Difference Kinds Of Leasing?

There are three main types of leases including long term lease, operating lease and contract hire. In the long term lease, the lease is amortized over the life of the equipment. After that the company  covers the full cost of the equipment and all the charges. Financing lease is usually capitalized on the balance sheet. Second type of lease, operating lease is the one in which lease ownership is not transferred to the party and payment is charged as a rent expense. Thirdly, there is contract lease which is usually takes for vehicles hiring by the companies and in this lease the company takes some responsibility for management and maintenance of the leased asset.

There are three types of leases including financing lease, operating lease and contract lease. Financing lease is the one in which the leased asset is capitalized by the lessee. The ownership of the asset is transferred to the company and there is a bargain purchase option to the company. Secondly, there is operating lease in which the leased asset is treated as a rental asset and the payments are considered as rental payments. Third type of lease is the contract lease in which the company takes some responsibility for management and maintenance of the asset and it is mostly used by the companies for vehicles rentals. All of these types of leases vary depending upon their terms and conditions and accounting handling.