LEASE OR PURCHASE
In putting up a business, lease or purchase may be two alternatives by which equipment could be acquired depending on the avaialability for lease and the specification of
the unit required.
Equipment leases usually do not require down payments except for some refundable security deposit. Even if the equipment is purchased thru a loan, a down payment of
cash may be required by the seller.
The cost of lease is the lease paid on a regular basis while the cost of owning the equipment is the depreciation for the wear and tear and or spreading acquisition cost over a period where the equipment may be useful.
Example, a lease rebtal is 10,000 a month. This is the cost charged as expense. If the same equipment was purchased for $ 100,000 and estimated useful is 20 years, the depreciation cost of 5,000 may be charged monthly.
posted by cathy at 7:52 AM
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