SCLEASE

WHAT IT COMPARES Two ways to control the same asset. The buy path pays a purchase price and a loan, keeps the residual and takes the depreciation. The lease path pays rent, escalation and a deposit, and hands the asset back or buys it at the option price. DISCOUNTING Every outflow and inflow is discounted at the rate you enter, on the payment rhythm you select. Advance payments shift one period earlier, which is why timing changes the answer more than people expect. TAX AND RESIDUAL Interest, straight-line depreciation and maintenance are deductible on the buy path. Rent is fully deductible on the lease path. The residual is taxed on the gain over book value, and a bargain purchase option is exercised only when the strike sits below the modelled residual. BALANCE SHEET The contract is classified as a finance lease when a fixed option sits well below expected residual, or when the…