spot_img

JAIIB AFM EXAM | Chapter 26 | Module C [FREE EPDF]

Have you ever wondered how businesses use high-cost machinery without buying it? Or how companies manage cash flow effectively while using expensive assets? Welcome to the world of Equipment Leasing!

If you’re preparing for JAIIB or CAIIB exams, understanding leasing is crucial for your success in the Financial Management (FM) module.

📚 JAIIB Study Resources 📚

🎥 Full Course Videos in Hindi-English
👉 Check Here

📝 JAIIB PPB Short Notes (Part 1)
👉 Check Here

📖 JAIIB Exam Free Study Material
👉 Check Here

📄 JAIIB Study Material PDF Notes 2025
👉 Get Tests Here

🔍 How to Prepare for PPB
👉 Check Here
  • What is leasing and how it works
  • Key terms: Lessor, Lessee, Lease Rental, etc.
  • Types of leases – Finance Lease vs. Operating Lease
  • Tax implications and GST on leasing
  • Accounting treatments in lessee & lessor books
  • Real-life examples and case studies

Watch the full breakdown in the video below and don’t forget to comment your doubts!

 

Understanding Equipment Leasing

What is Leasing?

Leasing is a financial arrangement where the owner (lessor) allows another party (lessee) to use an asset for a fixed period in exchange for periodic payments.

Types of Leases

Finance Lease vs. Operating Lease

Finance Lease

  • Ownership Transfer: Happens at the end of the lease term.
  • Example: Leasing industrial machinery for 10 years, with an option to purchase at a lower price.
  • Accounting: Lessee records it as an asset and liability.

Operating Lease

  • Ownership: Remains with the lessor.
  • Example: Renting office space or vehicles for business use.
  • Accounting: Lease payments are recorded as expenses.

GST & Tax Implications on Leasing

GST on Leasing

The CGST Act 2017 (Section 7) considers leasing as a supply of services, making it taxable under GST.

JAIIB Exam | Advance Financial Management | Chapter 24 | Module C [FREE EPDF]

Accounting Treatment

In Lessor’s Books

  • Finance Lease: Asset is shown as a receivable (present value of lease payments).
  • Operating Lease: Asset remains on the lessor’s balance sheet.

In Lessee’s Books

  • Recognizes Right-of-Use (ROU) asset.
  • Records lease liability.

Advantages of Leasing

For Lessee

  • Preserves Borrowing Capacity
  • Full Financing
  • Tax Benefits
  • Risk Mitigation

For Lessor

  • Steady Income
  • Ownership Retention
  • Depreciation Benefit

Case Study: Buy vs. Lease Decision

Criteria Buying (₹) Leasing (₹)
Equipment Cost 50,00,000 0
Loan Interest Cost 6,00,000 0

Conclusion

By now, you should have a strong grasp of Equipment Leasing, its types, and financial impact.

What’s next?

  • Comment below: What’s your biggest takeaway from this session?
  • Subscribe & Follow: Stay updated with more JAIIB/CAIIB prep content.
  • Download the PDF: Get a structured version of this topic for revision.

📥 Download PDF Notes

 

LEAVE A REPLY

Please enter your comment!
Please enter your name here

🤩 🥳 JAIIB NEW BATCH START 🥳 🤩spot_img
🤩 🥳 JAIIB CAIIB CLASSES 🥳 🤩spot_img

POPULAR POSTS

RELATED ARTICLES

Continue to the category

How to Score 60+ in Accounting Exam in One Attempt – For JAIIB AFM Aspirants

Preparing for the JAIIB AFM (Accounting & Financial Management) paper and aiming to score 60+ marks in your very first attempt? You’re in the...

Atal Pension Yojana Explained – Full Details, Benefits, Eligibility & Death Rules

What if you could retire peacefully with a guaranteed monthly pension—even without a government job? Sounds unbelievable, right? That’s exactly what the Atal Pension...

TDS & TCS Rule Changes Explained – New Limits, Removed Sections & Complete Guide

Are you still calculating TDS or TCS using the old rules? From April 1, 2025, India’s tax system is introducing several crucial updates that...

TReDS Explained – RBI’s Digital Platform Empowering MSMEs with Instant Invoice Financing

Have you ever experienced a situation where you delivered your products or services on time but had to wait endlessly for payments from large...