capital lease
Capital Lease
A long-term
lease in which the
lessee must record the leased item as an
asset on his/her
balance sheet and record the
present value of the lease payments as
debt. Additionally, the
lessor must record the lease as a
sale on his/her own balance sheet. A capital lease may last for several years and is not
callable. It is treated as a sale for tax purposes. It is also called a financial lease.
Farlex Financial Dictionary. © 2012 Farlex, Inc. All Rights Reserved
capital lease
The long-term lease of a capital asset. To the lessee, a capital lease is the same as owning the asset. Accounting rules require that the leased asset and the present value of the lease payments be recorded on the lessee's balance sheet. For the lessor, a capital lease is treated as a sale of the asset. Also called financial lease.
Wall Street Words: An A to Z Guide to Investment Terms for Today's Investor by David L. Scott. Copyright © 2003 by Houghton Mifflin Company. Published by Houghton Mifflin Company. All rights reserved. All rights reserved.
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