Variant 11 Write any 10 terms with definitions on topics covered. What are leasing operations? Write a detailed answer of 8-10 sentences. What is follow-the-leader pricing in the enterprises? Head of the Department «State Finance» prof

2. What Is an Operating Lease? An operating lease is a contract that allows for the use of an asset but does not convey ownership rights of the asset. Operating leases are considered a form of off-balance-sheet financing—meaning a leased asset and associated liabilities (i.e. future rent payments) are not included on a company's balance sheet. Historically, operating leases have enabled American firms to keep billions of dollars of assets and liabilities from being recorded on their balance sheets, thereby keeping their debt-to-equity ratios low. To be classified as an operating lease, the lease must meet certain requirements under generally accepted accounting principles (GAAP) that exempt it from being recorded as a capital lease. Companies must test for four criteria—“bright line” tests—that determine whether rental contracts must be booked as operating or capital leases. Current GAAP rules require companies to treat leases as capital leases if: As per the Indian accounting standard, lease payments by the Lesse needs to be treated as an expense on a straight line basis over the life of the lease contract. Lessor will treat leased assets as per their nature in the balance sheet. Lease income from operating leases will be treated as an income on a straight line basis over the life of the lease contract. A Lease can be defined as a contract where a party being the owner (lessor) of an asset (leased asset) provides the asset for use by the lessee at a consideration (rental), either fixed or dependent on any variables, for a certain period (lease period), either fixed or flexible, with an understanding that at the end of such period, the asset, subject to the embedded options of the lease, will either be returned to the lessor or disposed off as per the lessor’s instructions.

Leasing is nothing more than a method of paying for the use of an asset over a specified period of time. Though it seems very similar to the concept of renting, they are very different.

3. Leader pricing is a common pricing strategy used by retailers to attract customers. It involves setting lower price points and reducing typical profit margins to introduce brands or stimulate interest in the business as a whole or a particular product line. Products sold in this strategy are often sold at a loss. Such products are referred to as loss leaders. Small businesses may use this strategy at times but do not benefit as much as large retailers.

A price leader is a company that exercises control in determining the price of goods and services in a market. The price leader’s actions leave the other competitors with few or no options other than to adjust their prices to match the price set by the price leader. Price leaders are usually large firms in the industry that incur the lowest production costs and, therefore, are in a position to undercut the prices charged by their competitors. Other players who are not comfortable with the price leader’s prices may still charge higher prices, but it will result in a reduced market share for their goods or services. A market leader could be a product, brand, company, organisation, group name which has the highest percentage of total sales revenue of a particular market. Market leader dominates the market by influencing the customer loyalty towards it, distribution, pricing, etc.