- capital lease
USAFunctionally a financing transaction (an asset is acquired and a liability is incurred). A lease is a capital lease under GAAP if the characteristics of ownership passes from the lessor to the lessee or the lessee is compelled to purchase the asset that is being leased. Characteristics include:• Term of the lease is greater than 75% of the property's estimated economic life.• The lease includes an option to purchase the asset for less than fair market value.• Ownership of the property is transferred to the lessee at the end of the lease term.• The present value of the lease payments exceeds 90% of the fair market value of the property.
Practical Law Dictionary. Glossary of UK, US and international legal terms. www.practicallaw.com. 2010.
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capital lease — capital lease, capitalized lease See lease. capitalized lease Lease obligations that must be capitalized under GAAP; the unpaid future lease payments due under the terms of the lease must be shown as a liability on the firm s balance sheet. As a… … Financial and business terms
Capital Lease — A lease considered to have the economic characteristics of asset ownership. A capital lease would be considered a purchased asset for accounting purposes. An operating lease, on the other hand, would be handled as a true lease, or rental, for… … Investment dictionary
capital lease — Gen Mgt a lease that is treated as though the lessee had borrowed money and bought the leased assets. If a lease agreement does not meet any of the criteria below, the lessee treats it as an operating lease for accounting purposes. If, however,… … The ultimate business dictionary
Capital lease — A lease obligation that has to be capitalized on the balance sheet. The New York Times Financial Glossary * * * capital lease UK US noun [C] ► FINANCE, PROPERTY a legal agreement that allows a person or organization to make regular payments for… … Financial and business terms
capital lease — A *lease whose contractual terms and economic effects involve the transfer of the *risks and *rewards of a leased asset. Under most systems of *Generally Accepted Accounting Principles, a *lessee *capitalizes in its balance sheet an asset… … Auditor's dictionary
capital lease — In the USA, a lease that does not legally constitute a purchase although the leased asset should be recorded as an asset on the lessee s books if any one of the following four criteria is met: • the lease transfers ownership of the property to… … Accounting dictionary
capital lease — In the USA, a lease that does not legally constitute a purchase although the leased asset should be recorded as an asset on the lessee s books if any one of the following four criteria is met: • the lease transfers ownership of the property to… … Big dictionary of business and management
capital lease — A contract that transfers ownership of property to the lessee at the end of the lease term. A contract for the lease of property which possesses the characteristics of a purchase … Black's law dictionary
capital expenditures — USA capital expenditures, Also known as capex. Expenses incurred in acquiring, repairing or improving physical assets (equipment, property, plants), including acquiring assets pursuant to a capital lease, restoring or adapting property to a new… … Law dictionary
Lease Utilization — A financial ratio that measures how much a company uses leasing arrangements to acquire its fixed assets. Utilization ratios come in two types, which correspond with operating leases and capital leases respectively: operating lease utilization… … Investment dictionary