A Capital Lease is a contract in which one party (the “Lessor”) gives another party (the “Lessee”) the exclusive right to use and possess its property or equipment (the “Leased Property” or “Leased Equipment”) for a specified period. Capital Leases typically have a $1 purchase option at the end of the lease.
A lease that meets any of the following criteria will be deemed to be a Capital Lease:
A Capital Lease would be considered a loan for accounting purposes, whereas an Operating Lease would be treated as a True Lease or rental for accounting purposes. The choice of lease-type/classification will have an important impact on a firm’s financial statements.
$7.8 MILLION CAPITAL LEASE60 MONTHSCNC MACHINES
$4 MILLION CAPITAL LEASE84 MONTHSMOTOR COACHES
ABOVE GROUND MINING EQUIPMENT
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