capital lease

Capital lease

A lease obligation that has to be capitalized on the balance sheet.
Copyright © 2012, Campbell R. Harvey. All Rights Reserved.

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.
References in periodicals archive ?
One of the four criteria which may define a capital lease is the presence of a bargain purchase option.
Examples of liabilities measured at present values include deferred compensation and capital lease obligations.
Capital lease increases the occupancy rate for the office space to 77 percent, and Rockefeller Group anticipates the remainder will be leased prior to the scheduled completion of the renovation at the end of 2019.
As of June 30, 2017, the company had: unrestricted cash, cash equivalents and short-term investments of USD 844 million and outstanding debt and capital lease obligations of USD 528 million.
The rules of accounting and financial reporting discussed for accounts payable, notes, debentures and bonds, and the related interest accruals are different from those that apply to a government's capital lease liabilities.
The existence of these clearly delineated limits allows companies to structure leases in a manner that circumvents these specific bright lines and thus avoid recognition of the lease assets and associated lease liabilities that are inherent to capital lease arrangements.
This involved the purchase of four dry bulk vessels and the subsequent leaseback of the vessels to Newlead Holdings, an international shipping company, under a Sharia-compliant eight-year capital lease structure with a total transaction value of $85 million.
capital lease distinction is based on bright-line tests that are arbitrary.
Some preparers might classify a lease as a capital lease if the lease payments were more than half of the total value of the property, and some might use a percentage closer to 100 percent.
Under the terms of the acquisition KPNQwest has issued approximately EUR211m of 10% convertible bonds due 2012 to former GTS bondholders and assumed an approximate EUR435m of net bank debt and capital lease obligations.
In contrast, operating income increases because it excludes capital Lease interest expense.