A Financial Lease is a long-term lease where the lessee bears the risks (maintenance, obsolescence) and enjoys the rewards of the asset, almost like ownership, though legal title remains with the lessor.

In Hire Purchase, the hirer has the option to purchase the asset at the end of the term. Ownership passes only when the final installment is paid. In Lease, ownership typically remains with the lessor.

An Operating Lease is like a rental agreement (e.g., renting a car for a week). It is short-term, doesn't cover the full asset cost, and the lessor handles maintenance. Financial Lease is the opposite.

Residual value is the expected fair market value of the leased asset at the conclusion of the lease period. In a financial lease, the lessee often guarantees this value.

AS-19 criteria for Finance Lease include: transfer of ownership, option to purchase at bargain price, lease term covering major economic life, and PV of MLP essentially equaling fair value.

In a Leveraged Lease, the lessor borrows a large portion of the asset cost from a lender (non-recourse debt). The lessor provides only a small equity portion but enjoys tax benefits of ownership.

A Financial Lease is a non-cancellable contractual commitment where the lessee uses the asset for most of its economic life, bearing all risks and rewards, effectively acting like the owner.

Obsolescence risk is the risk that the asset loses value faster than expected due to new technology or market changes. In an Operating Lease, this risk remains with the Lessor; in a Finance Lease, it is transferred to the Lessee.

In Hire Purchase, the hirer is a bailee of the goods until the final installment is paid. The option to purchase is exercised only at the very end.

In this arrangement, the owner sells an asset to a lessor and immediately leases it back. This frees up cash (capital) from the asset for working capital needs, without losing possession.

Since a Financial Lease transfers substantially all risks and rewards to the lessee, accounting standards require the lessee to capitalize the asset (show it on the Balance Sheet) and claim depreciation, even though legal title is with the lessor.

Throughout the lease term, the Lessor (the entity leasing out the asset) retains the legal title/ownership. The Lessee only gets the right to use the asset.

In an Operating Lease, the risks and rewards of ownership remain with the Lessor. Therefore, the Lessor retains the asset on their books and claims depreciation as a tax deduction. The Lessee claims the lease rental as an expense.

In a Wet Lease, the lessor provides the aircraft, complete crew, maintenance, and insurance. A Dry Lease involves only the aircraft.

The Primary Period is the basic non-cancellable term of the lease aiming at cost recovery + profit. The Secondary Period follows, often with nominal rent.