BANKING AFFAIRS

Detailed explanation-1: -A Direct lease, a sale and leaseback, and a Leveraged lease are all examples of which of the following? Notes: Finance lease, also known as Full Payout Lease, is a type of lease wherein the lessor transfers substantially all the risks and rewards related to the asset to the lessee.

Detailed explanation-2: -Sale and Lease Back and Leveraged Lease: This arrangement allows the initial buyer to make full use of the asset while not having capital tied up in the asset. Leasebacks sometimes provide tax benefits.

Detailed explanation-3: -Leveraged leases are most often used in the renting of assets planned for short-term use. Assets like cars, trucks, construction vehicles and business equipment are typically all available through the option of leveraged leasing. Leasing in general means a company or individual will be renting an asset.

Detailed explanation-4: -Example of a Leaseback At the outset, a bank owns all of the physical vaults in its basements. The bank sells the vaults to a leasing company at market price, which is substantially higher than the book value. Subsequently, the leasing company will offer back these vaults to the same banks to rent on a long-term basis.

Detailed explanation-5: -An open-ended vehicle lease, where there is an obligation to purchase the car at the end of the lease, is an example of a finance lease. In an operating lease, the lessee records a “right-of-use asset” and a lease liability on their balance sheet.