The consideration that the lessee pays to the lessor for the lease transaction in the lease rental. Lease rentals are structured so as to compensate (in the form of depreciation) the lessor for the investment made in the asset, and for expenses like interest on the investment, repairs and servicing charges home by the lessor over the lease period.
Modes or Terminating the Lease.
At the end of the lease period,various courses are possible.
(a) The lease is renewed on a perpetual basis or for a definite period.
(b) The assets reverts to the lessor
(c) The asset averts to the lessor and the lessor sells it to a third party.
(d) The lessor sells the asset to the lessee.
The parties may mutually agree to and choose any of the aforesaid alternatives at the investments of a lease term.