Any lease that is not classified as an Operating Lease.
Lease involving eventual transfer of capital equipment to the lessee. May be known as a "full payout lease"
lease on property that meets any one of the following criteria: Transfers ownership at the end of the lease term, contains a bargain purchase option, has a lease term of 75 percent or more of the estimated life of the property, present value of minimum lease payments is 90 percent or more of the fair value of the property. see also operating lease.
See Recharge Center definition of Capital Lease.
Typically, $1.00 out leases are considered capital leases. This type of lease is very similar to a financing agreement, meaning that payments are similar to a bank loan. Equipment is placed on a depreciation schedule and written off over a period of years. Consult your tax advisor regarding the fact that capital leases are not 100% tax deductible.
a considerable lease obligation that has to be capitalized on the balance sheet
a contract which transfers substantially all of the risks and benefits of ownership of the leased property to the lessee
a direct substitute for purchase of the asset with
a direct substitute for the purchase of an asset with a term
a finance lease, which means that for the customer it represents nominal ownership
a financing instrument designed to enable the lessee (business) to pay for equipment, just as would a loan
a lease that must be reflected on a company's balance sheet as an asset and corresponding liability
an acquiring Lease that allows for the installment purchase of an asset over its useful life with all of the benefits and risks incidental to the ownership of the asset
an obligation or liability because the government is obligated under contact, and often penalty, to pay for an asset (a building, for example) for a long period of time
a non-cancelable, fully amortized lease which covers real
A long-term lease of property, plant, or equipment in which the lessee acquires essentially all the risks and benefits associated with the ownership of the leased item. Because it most closely resembles the financing of an asset purchase, a capital lease is treated as a long-term debt rather than as a rental.
A lease obligation which in essence is a purchase of the equipment
a lease contract where by the lessee obtains ownership (lease to buy) or derives a substantial amount of the benefits of ownership by the end of the lease term. 3.4.3i
lease that meets at least one of the criteria outlined in paragraph 7 of FASB 13 and, therefore, must be treated essentially as a loan for book accounting purposes. The four criteria are: title passes automatically by the end of the lease term lease contains a bargain purchase option (i.e., less than the fair market value) lease term is greater than 75% of estimated economic life of the equipment present value of lease payments is greater than 90% of the equipment's fair market value A Capital Lease is treated by the lessee as both the borrowing of funds and the acquisition of an asset to be depreciated; thus the lease is recorded on the lessee's balance sheet as an asset and corresponding liability (lease payable). Periodic lessee expenses consist of interest on the debt and depreciation of the asset.
A lease which meets at least one of the criteria in paragraph 7 of the FAS 13 standards, meaning that the lease must be treated essentially as a loan for book accounting purposes. A lease is a capital lease if any one of the following is true: (a) the lease automatically transfers ownership of equipment to the lessee at the end of the lease term; (b)the lease contains an option to purchase equipment at a bargain price; (c) the lease term is equal to 75 percent or more of the estimated useful life of the equipment (does not apply to used property); or (d) the present value of the minimum lease rental payments equals 90 percent or more of the fair market value of the leased property.
A type of lease which is treated as a purchase by the Lessee and by the Lessor as a sale or financing. Generally Capital Leases can be identified if it meets the following criteria: a) The lessor transfers ownership or title to the lessee at the expiration of the lease term. b) The lease term is equal to 75% or more of the estimated economic life of property (there are exceptions for used property leased toward the end of its economic life). c) The lease contains an option to purchase the asset at a bargain price. d) The present value of the required lease rental payments are equal to 90% or more of the estimated Fair Market Value of the leased asset at lease inception. If you plan on owning the equipment at the end of lease term or your long term goal is to own the equipment this might be a good lease for you. Please contact your accountant.
A lease for capital equipment or goods.
A capital lease (similar to a term loan or a conditional sales contract) is usually used to finance equipment for the major part of its useful life, and there is a reasonable assurance that the lessee will obtain ownership of the equipment by the end of the lease term.
From a financial reporting perspective, a lease that has the characteristics of a purchase agreement, and also meets certain criteria established by the Financial Accounting Standards Board Statement No. 13 (FASB 13). Such a lease is required to be shown as an asset and a related obligation on the balance sheet.
Under a capital lease, the lessor transfers the investment risk to the lessee. This means that the lessor bears only the credit risk and any agreed services. The lessee is the beneficial owner of the leased asset. Capital leases are characterized by a fixed basic term during which the lease may not be terminated by the lessee.
A long-term lease in which the risk of ownership lies with the lessee and whose terms resemble those of a purchase or sale on installment.
A capital lease is used when you want equipment costs fixed at end of the lease (usually has a $1 purchase option). This type of lease must be disclosed as an asset and related obligation on the balance sheet. From a financial reporting perspective, a capital lease has the characteristics of a purchase agreement, is usually "on the balance sheet," and usually does not allow as favorable a financial statement presentation when seeking bank credit as does a True Lease.
A lease that for all practical purposes results in the purchase of the asset.
A lease that from the financial reporting standpoint has the characteristics of a purchase agreement, that meets at least one the criteria outlined in paragraph 7 of FASB 13. A capital lease must be shown as an asset and a related obligation on the balance sheet of the lessee.
A FASB 13 accounting classification to be accounted for by a lessee as a purchase and by the lessor as a sales or financing agreement, if it meets any one of the following criteria: (a) The lessor automatically transfers ownership to the lessee at the end of the lease term; (b) the lease contains an option to purchase the asset at a bargain price; (c ) the lease term is equal to 75% or more of the estimated economic life of the property (exceptions apply for used property leased toward the end of its useful life); or (d) the present value of minimum lease rental payments is equal to 90% or more of the fair market value of the leased asset, less related investment tax credits retained by the lessor (Also see operating lease).
A transaction that FASB views as a sale of equipment by Lessor and a purchase of equipment by Lessee. The lease has the characteristics of a purchase agreement, and also meets any of the following criteria established by FASB 13: a) the lease transfers ownership to the lessee at the end of the lease term; b) the lease contains an option to purchase property at a bargain price, c) the lease term is equal to 75% or more of the estimated economic life of the property (exceptions for used property leased toward the end of its useful life) or d) the present value of minimum lease rental payments is equal to 90% or more of the fair market value of the leased property less related ITC retained by the lessor. Such a lease is required to be shown as an asset and a related obligation on the balance sheet of the lessee. Also known as Conditional Sales Agreements.
This is a lease with a pre-stated bargain purchase option. Most popular are the $1 Buy out, $101 buy out, PUT (payment upon termination) & 10% purchase option. Exercising this option upon termination of the original leases term will transfers ownership and generally does not qualify under IRS guideline FASB 13 as an operating or tax lease. This equipment is treated as an asset and liability on your balance sheet. However, some significant other tax benefits under IRS section 179 may be available to your business. Calendar year 2004 allows for up to $100,000 in a one time write off for capital lease purchases (please see MAC Financial's tax advantages for more info) Always consult your accountant for your particular tax situation.
A lease arrangement that is recorded as a fixed asset and a debt obligation in a balance sheet of the hospital under generally accepted accounting principles, as opposed to an Operating Lease.
An agreement that conveys the right to use property, plant or equipment, usually for a stated period of time. See LEASE-PURCHASE AGREEMENTS.
A finance Lease that meets at least one criterion outlined in Paragraph 7 of FASB 13 and is treated as a loan for accounting purposes.
From a financial reporting perspective, a capital lease is one that has characteristics of a purchase agreement, and also meets certain criteria established by the FASB. Such a lease is required to be shown as an asset and related obligation (capitalized) on the balance sheet of the Lessee.
Leases can have various designations. A capital lease means that the unit leasing (leasee) the asset, in substance, has rights and obligations that are just as if the unit owned the asset. For example, if the unit promises to pay the lease for 10 years and that payment meets certain criteria then the leasee must treat the 10 year payment like a long term obligation. The unit cannot simply say it is only obligated for the forthcoming year.
A specific classification of a lease for accounting purposes. The classification of the lease will determine how the lease is to be accounted for. A lease is accounted for by the lessee as a capital lease if it meets one of the following criteria: (a) at the end of the lease, the lessee owns the property being leased; (b) at the end of the lease, the lessee can purchase the property for a bargain purchase option; (c) the lease term exceeds 75% of the estimated economic life of the leased property; (d) the present value of all lease payments is equal to 90% or more of the cost of the leased property.
A leasing transaction that is recorded as a purchase by the lessee.
Rental where the lessee obtains major property rights from the lessor although not legally a purchase of the property.
Although the lessee does not legally own rental property, the property is theoretically acquired and recorded as an asset with the related liability.
A lease valued at $100,000 or more. More difficult criteria must be evaluated in consultation with Plant Accounting to accurately determine this classification and the use of Account Code 006130 and 006150. Equipment acquired under a capital lease is inventoried and tagged at the inception of the contract.
A lease that "in substance" is a purchase and financing arrangement. When a lease meets certain criteria, the asset being "rented" is recorded as an asset and a liability is also recorded. A lease that is truly a rental arrangement is known as an operating lease. To Top