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Product Category: Projects

Product Code: 00001242

No of Pages: 54

No of Chapters: 5

File Format: Microsoft Word

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1.1 Background of Study

1.2 Statement of Problem

1.3 Scope and Limitation of the Study

1.4 Aim and Objective of the Study

1.5 Definition of Terms



2.0       Introduction

2.1       Definition of Terms 

2.2       Provision of a Lease Agreement

2.3       Accounting Treatment for Lease Agreement

2.4       Accounting for Finance Lease by the Leassee

2.5       Accounting for Operation Lease by the Lessee          

2.6       Accounting for Finance Lease by the Lessor

2.6.2   Accounting Treatments under A Sale And Lease Back Transaction

2.6.3   Operating Lease 

2.7       Finance or Capital Lease 

2.8       Operating and Finance Lease Arrangement Variants Sale and Lease Back  

2.9       Benefit Derivable From Leasing Arrangement by a Lessor

2.10 Financial Leverage Consideration

2.11    Benefits Derivable From a leasing Arrangement by Lessee Server as


2.12    The Growth of Leasing Industry in Nigeria



3.0       Research Methodology

3.1       The Research Question

3.2 Characteristics of the Population

3.3 Date Collection

3.4 Administration of Questionnaire

3.5 Methods of Data Collection

3.6 Limitation of the Methodology


4.0 Data Presentation and Analysis

4.1 Introduction

4.2 Presentation of Data

4.3.      Testing of Hypothesis


Summary of the Study, Conclusion and Recommendation

5.0 Introduction

5.1 Conclusion









1.1 Background of Study

The introduction of leasing business into the Nigeria economy could be traced back to the sixties by the overseas leasing companies based in the United Kingdom. This leasing arrangement had contributed to the growth of Nigerian economy in the sixties before the break out of the Civil War in 1967. The Oil glut of the late sixties had a mojor impact on the prosperity in Nigeria, the resultant effect led the nation to embark on an impressive industrialization programme requiring heavy capital out lay. As most of the foreign contractors could not afford the immediate cash impact of the purchase of such capital assets, leasing came in as a profuct alternative to financing.

  The advent of new Merchant Banks in Nigeria in the seventies also accelerated the growth of leasing as a means of assest financing in Nigeria. From an level of N7.6 million in 1977, the leased assests volume grew to N 26 million by 1980 in Nigeria.

The period between 1986-1991 as against N206.7 million in 1986. As a result of the structural Adjustment programme (SAP) introduced in 1986.

The SAP was introduced to achieve the following.

1.      To restructure and diversity the productive base of the economy in order to reduce dependence on the oil sector and imports.

2.      To achieve fiscal and balance of payments viability over the imports.

3.      To lay the basis for sustainable non-inflationary or minimal inflationary growth.

4.      To lessen the dominance of unproductive investment in the public sector, sector’s efficiency and intensity the growth potential of the private sector.


Equipment leasing volume has been growing tremendously from N26 million in 1980 to N5 billion 1993. The chairman of Equipment leasing association of Nigeria (ELAN), MR Loakunle Olabisi remarked during “ELANS” Anniversary in November, 2000 that “over N20 billion worth of assets have been leased in the various sectors of the economy.

Many Nigerian companies had been ruined because of the malady of illiquidity which led to insolvency and bankruptcy of most firms despite annual declaration of huge profit and dividends.

Due to financial mismanagement, all the money realized from the sale of crude oil were squandered. Cash problem was equally extended to the Nigerian business firms. As a result of lack of cash, most firms were unable to acquire the necessary foreign exchange to import raw materials. Plants and machinery and other factor inputs. The Equipment leasing Association of Nigerian (ELAN) with only six Merchant Banks as members at inception ELAN has grow to over 1200 at 1997.

            The introduction of licensing policy which discouraged investment in capital asset in favour of spare parts and raw materials affected the growth of leasing by the leasing industry. However the growth of leasing by second tier foreign Exchange market (SFEM) and the structural Adjestment programme (SAP) in 1986 brought returned a relief to the leasing industry. The exchange rate of N1 to before SAP and SFEM made it difficult for most companies to finance their huge capital asset requirements due to the attendant problems of the required in borrowing from the Banks. Financing of capital through leasing became more viable to most companies. With the exchange rate fluctuating between N 85 and N88 to 1 in 1998 thus, SAP and SFEM became the most fundamental institutions in the Nigeria economy, that affected positively the growth of the leasing industry in Nigeria. Several Government policies over the years also encouraged the leasing industry such as the removal of the Nigeria, Airways monopoly on domestic routes which encouraged private participation in domestic flights. The privatization of Government parastals, like Nigeria Airways, Nigeria Telecommunications (NITEL) plc Nigerian port Plc the media manufacturing companies, will engance leasing transactions to make them more efficient in the operations. In view of the recent pronouncement by the federal Government on privatization and commercialization of Government parietals, the leasing industry in Nigeria is poised for greater volume of capital assets in this millennium.


1.2      Statement of Problem

The problem to be examined in this study are enumerated as follows:

1.      To find out the operational difficulties faced by leasing companies relating to industrial inspectorate Act of 1970 by not encouraging as a product alternative to asset financing.

2.      To ascertain Negative impact of the new statement of accouraging standard SAS II.

3.      To find out effect of leasing not having any special tax privileges on lensed asset.

Volume which discourage leasing practice that is the leases is not allowed to claim capital allowances on the equipment leased.


1.3       Scope and Limitation of the Study

            This research work concentrates on twenty notable companies in the leasing industry in Nigerian. Since it is humanly impossible to embark on the aforementioned tasks, the study was therefore limited to twenty notable companies located in the western and Eastern zone in how well conducted that is freed from certain limiting factors. This study therefore is no exception to this assertion. Apart from the limiting factors caused by the down policies of the selected firms.


1.4       Aim and Objective of the Study

            The questionnaires were tailored to answer the research questions this internal validity on the research, External validity, on the other hand, is assumed by the fact that the finding are generalisable given the number of respondents their level of involvement in leasing activities and the facts that they all control what goes on in their branches throughout the county.

1.5       Definition of Terms

            The following words are defined as they are used in this study.

1.      Lease

“A lease is a contractual agreement between an owner (the lessor and another party (the Lease) which conveys to the lease the right to use the leased asset for anagreed period of time in return of a consideration usually periodic payments called rents.

2.      Operating Leases

“is a lease in which the less or while giving the use to the less property, relating practicall all the risks, Obligations and rewards of ownership (e.g obedience and appreciation)

3.      Finanace Or Capital Lease

is one in which ownership risks and rewards are transferred to the lessee, who is obligated to pay such cost as insurance maintenance and similar chage on the property. Usually the agreement is non-cancelled and the lessee has the options to buy the property for a normal amount upon the expiration of the lease.

4.      Leveraged Lease

“is a three lease involving a lender (often a financial institution) in addition to the usual lessee. The suppliers, in most cases the greater part of the purchase prior of the leased asset.

5.      Sale And Lease Back

“is a lease in which the seller of the property lease it back from the buyer.

6.      Capital Investment

An expenditure in as asset whose return expected to extend beyond year.

7.       Lease Term

Is the duration of the lease which may vary from a few month to the entire expected.

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