2 Points About Equipment Leasing

The lease does not show up as a long term debt on the financial statements of the business. The business will not own the equipment until the lease is over. Many companies resort to leasing equipment precisely because it does not show up as a debt – and thus makes the company more attractive to shareholders or potential investors.

Leasing allows companies to avoid budgetary or lack of authority restraints. Rather than spending large amounts of capital on an outright acquisition of equipment – which might need the approval of superiors and result in further delay – a company manager can lease the same equipment knowing that he is acting within his financial limits to do so.

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