INTERMEDIATE ACCOUNTING 2 PAPER
Why Leasing Becomes More and More Preferable for A Company in Indonesia? I.
Being in a very high competitive business condition, a company has to be well prepared for every potential business problem. One of the problems is for a company which will do such a business expansion, they need to spend huge amount of money to make some new investments. For instance, they need to have new capital assets to run their new business. Due to the huge amount of money they have to spend, the company usually does not provide a bundle of cash from their own pocket to get those kinds of new capital assets. To provide the new capital assets needed, the company has some alternative solutions they can choose. Those are 1.
Buying on the company’s own money pocket
Buying on bank or other financial institutions loan
Buying on the company’s own money pocket sometimes raise a new problem, the inadequate amount of money. If they decide to buy on bank or other financial institutions loan, they have to fulfill a lot of complicated requirements to make a debt and they are restricted to only a certain number of money, which is popularly known as 3L (Legal, Limit, and Lending). That’s why, more and more companies now decide to do a leasing as their alternative to get new capital assets. However, a new problem has risen from doing a lease regarding the termination or the cancellation of the approved agreement. There are three reasons of occuring the termination 1.
It is the cancellation of leasing transaction, for example due to a fire or natural disaster. 2.
It is the cancellation of leasing transaction because the lessee is not able to pay the lease payment and other leasing liability so that finance lease contract is over prior the inception date. 3.
It means the lessee ends the lease period up before the inception date due to economic consideration by paying all remaining liabilities. Due to...
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