However, the most common legal structure used in wealth financing is the lease or lease agreement – the funder buys the asset from the supplier and leases it against periodic payments normally cleared over a minimum lease period. The possibility of a secondary rental period may exist and, although tax rules prevent a prior agreement to transfer ownership to the tenant, this is sometimes achieved by a separate agreement concluded at the end of the lease. Assets acquired under financial leasing are recognised as amortised assets in a lessor`s accounts and then a leasing liability is recognised, which constitutes the obligation to pay future rents to the lessor. That is a good explanation. However, I do not understand why, in the case of finance leases, you do not make it clear that the lessee will become the owner of the asset at the end of the lease period??. Just from the moment he pays the last rent…

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Last Modified: September 11, 2021