Question

1. Are there any advantages/disadvantages to making the bindings rather than buying them?

Answer 1

In our view the question is any advantage or disadvantage of making the bindings rather than buying means

Taking the require assets for rent or lease rather than buying.

So we explain all our explanation with the above statement.

There are advantages and disadvantages of bindings rather than buying.

I will explain this by taking an example of large plant and machinery.

1. Here the company have to options that whether to buy the asset or to lease the assets.

2. In buying the company has to keep huge financial resources for purchase of the equipment and all the finance is get blocked at one place but in the lease we can use the multiple payments to use the assets and we can use our financial resources for other purposes.

3. The disadvantage is in bindings we do not get the ownership of the asset but in buying we get the ownership.

4. If we have the ownership we can keep those asset as charge and get some loans from the bank's.

5. In bindings we get the assets in our place but we cannot depreciate in our books of accounts. The depreciation will be taken in the books of accounts of the lessor.

6. The company has to also analyse the leverages analysis for choosing both the options.

7. The company can go to the loan to buy the product and pay every month installment rather than paying lease amount to lessor .

8. In getting loan and paying installment we get the ownership of the assets rather than paying lease amount to the lessor without getting ownership.

These are all the advantages and disadvantages of bindings rather than buying.

I hope, all the above mentioned points are useful and helpful to you.

Thank you.