Lease vs Rent | Top Differences You Must Know! - YouTube

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that's given below welcome everyone and today we have a topic with us is called

lease versus rent now what did this or topic is all about

we're going to learn the same and let me give you a short synopsis first well in

this topic what we are going to do is we are going to learn first the meaning of

what is lease what is rent we are going to understand some of the differences

like meaning what are the term is the accounting standards that those are

involved who are the parties are involved the considerations that are

given to the maintenance the change in contracts or agreement means offer that

that goes in the expiry and some of the key differences in this particular topic

so let's begin today lease versus rent well lease and rent aren't same on the

surface lease and rent seemed similar but there is a major difference between

both of them so what exactly lease and rent is all about let me just bifurcate

here well when an asset is given on lies the responsibility of the maintenance on

the lessee that means when a business takes an asset on lease the responsibility

of the maintenance lies in the business on the other hand when the asset is

let's say rented ok then in that scenario the responsibility of the

maintenance lies on the person who rents such asset or the property so in this

tutorial we will go through the comparative analysis of lease versus

rent so let's begin we're going to understand this even on the surface it

seems renting and leasing are similar but they are not in this - told we will

look at difference between the between them with the help of the infographics

first well leasing is entering into a contract with lessee for a long period

to use an asset or a property well rent is entering into agreement with her

tenant for a certain period to use an asset or a property here the contract

is with the lessee for a longer period and here for a certain stipulated

period okay to use it to use the property the term usually it is for the

long term here it is for the short term the accounting standard AS19 that is

the accounting standard number 19 now India's comes into picture and they are

based on is AS19 here for the rent there is no such accounting standard that

comes into picture that goes by the renting agreement because every renting

agreement have their own norms they want to put on their own clauses so it

depends upon the scene if there is no stipulated work now the parties here its

lesser in lessee here's the landlord and the tenant it's like you know you're

buying a house and you are the tenant the person from you from whom you are

renting in the house is your landlord you're the lessor and lessee it's like

let's say lessor is that's a Lufthansa so Lufthansa lessor is the

lessor your and the lessee is let's a General Electric or probably Boeing who

is leasing that particular source or or you know McQuarrie who is leasing such

assets now the considerations that are considered the monthly installments are

paid for the lease monthly rent is paid monthly quarterly for using the property

or assets the maintenance the responsibility of the maintenance has

satellize on the lessee while in renting the responsibility the

maintenance of the asset lies with the tenant the change in the contract

agreement once the contract is signed there is no change in the contract for

the fixed feet of time let's say for the 10 years so there is no change there is

no alterations that you can do here the changes in the agreement anytime

whenever they choose to go for usually it is for one year but if you want to

change then you can redraft it and you can change it now the offer it takes

very once the term is over they will ask to purchase the asset this is basically

a finance lease where once you pay the last installment once the term is over

you the asset belongs to you and there is no such offer that is given to the

tenant by the landlord over here once your term is over you need to leave the

place if you want to stay then you know probably they'll mean inflation in the

renting part well this was the difference between lease versus rent now

let me take you to some of the key differences see there are many

differences between lease versus rent some of the key differences that stands

out here is that lease is taken when a business does not have ample fixed

capital leases taken when they do not have ample fixed capital to buy an asset

like you know engines lending gears planes when they buy it they don't have

they don't have this high level of money to buy such planes or what they will do

they will go and buy those assets for the fixed end your for the fixed lease

right so there is one operating lease and financing lease so they'll buy it a

differencing lease but after the term is over the asset belongs to you yeah this

is sort of an operating lease this is finance operating lease renting over

here is basically after the term is over your asset belongs to the landlord

himself the leasing contracts are two parties a lessor and the lessee the

rental agreement has two parties land on and the tenant leasing okay is usually

done for the asset or the equipment's renting is mostly done for the

properties of land properties or land in leasing the service and the maintenance

are done by the lessee when he or she takes the equipment on lease in renting

on the other hand the servicing and the maintenance are done by the landlord

even if the tenant takes a property on friend here the leasing is done for the

fixed period under terms of the conditions are predetermined in the

contract are made by taking the mutual acceptance in renting the agreement the

terms and the conditions can be changed any point of time in leasing an offer to

purchase is given on the expiry of the leasing contract and here there is no

such offer given on the expiry of the e renting agreement well I hope you have

got a fantastic idea of what we are or what we are talking about here so

overall you may have got an idea that what lease and rent goes about lease and

rent they both are different but to a layman

they stand similar and that's why it is important to go deep into lease and rent

concept and understand even if the major difference between leasing and renting

is who needs to do the maintenance and the servicing so there are other

differences too and even if the two parties are involved in the contracts

the roles of the each party are different for example in leasing

contract both the parties have what you call as the Equal Rights right

that is involved for example leasing contract both the parties of equal

rights but in be renting agreement the landlord has more power than the tenant

though both can decide to go out of agreement whenever they want to in a

simple way over here I'll give you an example quickly that I know in let's say

there's a company called Jet Airways I won't use that Lufthansa let's say is a

lessor who is buying a plane or engine from a leasing company let's say

McQuarrie now McQuarrie is the lessor he is the lessor Lufthansa is the lessee

here Lufthansa buys let's say 4-5 years for 10 years usually the domicile

from McQuarrie so all the expenses probably maintenance Lufthansa will have

to bear not the mcquarrie Lufthansa will bear everything Lufthansa will take

depreciation also in its books of accounts and after on the on the tenth

year of the last installment the asset belongs to Lufthansa not McQuarrie but

here the rent renting is something like this again I'll just take the same

example here but the only thing is that here the asset is taken on rent that is

what we call as the operating lease so here Lufthansa takes the asset from

McQuarrie saying that I am NOT going to buy in future but what I will do is that

Lufthansa saying what I'll do from you is that I will be buying it for let's

say I want the asset for 5 years of time span and once the 5 years is

over what will happen is that post facto the asset will belong to my query itself

so after the term is over the asset will belong to make wire itself so all the

expenses that Lufthansa and girls for the maintenance McQuarrie have to build

McQuarrie will get all the sort of depreciation in its balance sheet in

its Piron account for the asset in the balance sheet the asset will be recorded

in the book of the mcquarrie okay and not in the

books of Lufthansa but I hope you have got a fantastic idea

of what goes in around in both of them and well that is it for now I hope if

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