QUESTION : Conceptually, a lease may be defined as a contractual arrangement/transaction in which a party owning

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QUESTION :

Conceptually, a lease may be defined as a contractual arrangement/transaction in which a party owning an asset/equipment (lessor) provides the asset for use to another/transfer the right to use the equipment to the user (lessee) over a certain/for an agreed period of time for consideration in form of/in return for periodic payment (rentals) with or without a further payment (premium). At the end of the period of contract (lease period) the asset/equipment reverts back to the lessor unless there is a provision for the renewal of the contract. Essentially there are different types of lease arrangements, such as a finance lease, operating lease, sale and lease back, direct lease, sale type lease and leveraged lease. The arrangement depends upon the unique needs and conditions incidental to the formation of the lease.

a. What is a" finance lease"? What are the essential conditions which should be inherent in a lease to qualify it as a finance lease? b. Explain what is a "sale and lease back" arrangement? Is it the same thing as securitization? C. It is often said that "Leasing" per se can also be covered as an "Off-Balance Sheet" item in accounts. Explain with examples. What is the benefit of this practice?