Terms

  1. Home
  2. Terms
  3. Accounting
  4. Capital Lease
Capital Lease

Capital Lease

Parent term
Accounting

A finance lease is a contract where a leasing company (the lessor or owner) buys the asset for the user (usually called the lessee) and rents it to them for an agreed period.

Terms

Asset Light

Mentioned by the Following

People

Jim Grant

Terms

Operating Lease

  • Also known as a finance lease
  • Considered a form of financing
  • Often lasts for the lifetime of the asset
  • The lessee makes rental payments that cover the original cost of the asset
  • Don't confuse with an operating lease - these are different!
  • The capital lease requires a renter to book assets and liabilities associated with the lease if the rental contract meets specific requirements. 
  • Is considered a purchase of an asset for GAAP.
  • A finance lease is defined in Statement of Standard Accounting Practice 21 as a lease that transfers.May 1, 2013

Warnings and Disclaimers

The information contained herein is obtained from sources believed to be reliable, but its accuracy cannot be guaranteed. It is not designed to meet your personal financial situation - we are not investment advisors nor do we give personalized investment advice. The opinions expressed herein are those of the publisher and are subject to change without notice. It may become outdated an there is no obligation to update any such information.

Copyright Finnotes.org © 2018 - 2020