Buy or Lease?

Paper Summary:

This paper disccusses how accounting weighs the factors involved in deciding whether to buy or lease in order to provide an analytical tool for use in making business asset acquisition decisions. The paper outlines the basic factors involved in decision-making, the process by which accounting deals with these factors, and the use of quantification for making differential analysis.


Outline:
Determining Factors
The Role of Accounting and the Problem of Quantification

From the Paper:

"One important decision that any business person must make is whether to buy or lease an asset that is needed to operate the business. Such assets can include almost every piece of property or equipment relevant the business, from real estate, to automobiles, to copiers. Business managers must make decisions about how to acquire these assets, and the two most common ways of doing so include: buying an asset outright (often with financed capital), or entering a termed lease. Because of the tax implications and concerns with the cost of ownership, it is important to quantify the advantages and disadvantages of each type of acquisition."

Sample of Sources Used:

• Moyer, R. C. "Bankruptcy Costs and the Financial Leasing Decision." Highbeam Research. 31 July, 2006. <http://www.highbeam.com/library/docfree.asp?DOCID=1G1:16309052&num=19&ctrlInfo=Round20%3AProd%3ASR%3AResult&ao=&FreePremium=BOTH&tab=lib>.
• Yagil, J. "A Comprehensive Lease/Purchase Model." Highbeam Research. 31 July, 2006. <http://www.highbeam.com/library/doc3.asp?DOCID=1G1:16310544&num=4&ctrlInfo=Round20%3AProd%3ASR%3AResult&ao=&FreePremium=BOTH&tab=lib>.
• Zahorsky, D. "Office Space: Lease or Buy?" Small Business Information. 31 July, 2006. <http://sbinformation.about.com/cs/office/a/aa111702a.htm>.

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