Question

1. What are the components of contractual obligations & commitments of a company? Why are they useful? Why do you think they are provided in detail?

2. What is the nature of leasing? In what way it can be viewed as a financing decision or a debt?

Answer 1

1. What are the components of contractual obligations & commitments of a company? Why are they useful? Why do you think they are provided in detail?

Ans:
Contractual Obligations and Commitments enable us to complete the Project on time and helpful in choosing Good Seller and Deliverable on time by maintaining the stated quality. Stated Quality can be only be delivered on basis of contractual Obligations & Commitments.

Advantages:
Legal Sue: The Agreements can be enforced in the law.
Penalised for delayed Delivery.
Sue for Damages if quality not maintained

The terms and conditions Should be in clearly shown I.e In case of delivery what cost are reimbursed , What is compensation if damaged products received and extent of liability, Who is required to Insurance while delivered and who is liable to pay charges while transporting and what extent to which and Mode and time of payments ect..

These are all should be clearly shown ,If these are not clear then there is a doubt who is liable for what causes, So it should be clearly Place what action should be taken for each event of Wrong actions and extent of Liability

2. What is the nature of leasing? In what way it can be viewed as a financing decision or a debt?

Nature of Leasing :

Leasing is a type of agreement between the lessor or lessee without holding the ownership by the holder of the Asset
The Nature of Leasing can be said as the Long term nature of Debt. As it is consists of features of Long term debt i.e Pay fixed instalments over certain period of time or Life period of asset .it is in Long term perspective.

It can be viewed as Long term perspective as it consists of characteristics of Long Term Debt Repayment ,As the Agreement Specify the Nature and terms of payments How the long term debt agreements are like similar to thus type of debt.

It can be viewed as Financing decision provided it Involves the Planning and Analysing and taking the decision whether to or not to take the particular underlying asset through lease.

Usefulness

Terms of Purchase obligations:

Purchase obligations is useful in deciding the time or last date for final payments, and Consequences if non paid or short paid ,Terms in Purchase Obligations specify the conditions which is need to comply by both supplier and Buyer.

Because if the terms of Purchase obligations contain the term as discount on early payment which must be comply by the Seller and If the Buyer failed to pay on time mentioned date in the Purchase obligations then he need to pay along with Interest as may be the rate mentioned by Seller

In case of any Disputes these Purchase obligations prevails and Enforce in the Law

Long Term Debt Repayments:

The Usefulness here nothing but It Contains Certain Terms Such As Mode of payment, Time of payment, Penalty for Non Payment and Consequences if the debt is not paid

These terms can be enforceable in the law if any party is not complied with terms stated in Agreements.

Lease obligations

The Usefulness here nothing but It Contains Certain Terms Such As Mode of payment, Time of payment ,Penalty for Non Payment and Consequences if the debt is not paid

These terms can be enforceable in the law if any party is not complied with terms stated in Agreements.