Sometimes known as an 'Operating Lease', Rental is best explained as "paying for the use of equipment owned by someone else". In this case, the Financier, Broadway Leasing, is the owner.

As the equipment is not yours, it is not carried as an asset or a liability. It is "Off Balance Sheet Funding". Let's assume the equipment is for 100% business use, then your instalments are 100% tax deductible as an operating expense. Why would you rent? It's best for assets which depreciate rapidly and generally need replacing or upgrading at the end of the term. Computers, Telephone Systems and most Office Equipment are well suited to Rental.

In the end, your payments are 100% tax deductible and you avoid being left with an obsolete piece of equipment. You can simply upgrade, purchase, continue renting at discounted instalments or hand the asset back.