RTI,Chennai Learning Objective Given the overview of the concepts of the lease finance the learner will obtain a perspective of the principle of leasing finance which will make him aware of all the provision in this regard so has to enable him to conduct the audit thereon effectively.

RTI,Chennai LEASE  Definition & nature  Parties to lease  Terms of lease

RTI,Chennai RULES & REGULATIONS GOVERNING LEASING COMPANIES  Capital adequacy standards  Acceptance of deposits by NBFCs

RTI,Chennai TYPES OF LEASES  Sale & lease back  Operating lease  Financial or capital lease  Leveraged lease

RTI,Chennai  Financial effects of lease.  Accounting for lease  Functions of the parties in respect of leveraged lease.

RTI,Chennai ADVANTAGES OF LEASING  Short term  Full funding  Simplicity  Reduced cost of borrowing  Tax benefits  Dilution of equity  Restrictive conditions

RTI,Chennai DISADVANTAGES OF LEASING  Forfeiture of tax benefits of ownership  Loss of residual value  Cost ineffectiveness  Lease rentals

RTI,Chennai EVALUATION OF LEASE FINANCE  Capital Budgeting techniques  Present value & Internal Rate of Return  Cash flow estimates

RTI,Chennai BORROWING Vs LEASE FINANCE Net advantage of leasing = Total Present Value cost of Borrowing – Total Present cost of leasing