A lease is a contract between the lessor and the lessee in such a way that lessor transfer to the lessee the right to use an asset for a specific period of time. In return, lessor takes a series of payments from the lessee.
The lease is used in cases where the asset cost is so much high that the entity cannot afford to bear it with one-time payment. The other case may be such that the entity has limited funds and it has to use that fund on more than one project. There are two types of lease as follows:
Finance lease
Operating lease