A transaction that appears as a lease from an accounting standpoint, but as...
An off-balance-sheet transaction, in which a special-purpose entity is created to book a loan, and the proceeds from the loan are used to buy some real estate. The real estate is then leased to the parent corporation, usually for a period of five to seven years. The corporation's lease payments are equal to the interest rate on the loan. At the end of the lease, a balloon payment comes due.
a financing vehicle that enables companies to move such
a lease in which the lessee guarantees the residual value of the leased property and also holds an option to buy the leased property at the end of the lease term
a leasing structure that gives the synthetic lessee a favorable mixture of the tax and accounting attributes of both purchase-with-financing and a true lease
an off-balance sheet financing technique that is frequently used by large, credit-worthy organizations
a tax and accounting lease and is not often used by municipal or federal government
a type of financing that is treated as an operating expense instead of a capital expense
A synthetic lease is basically a financing structured to be treated as a lease for accounting purposes, but as a loan for tax purposes. The structure is used by corporations that are seeking off-balance sheet reporting of their asset based financing, and who can efficiently use the tax benefits of owning the financed asset.
A form of off-balance-sheet financing used to acquire assets with a shorter economic life. The use of synthetic leases has slowed in recent years.
A synthetic lease is a financing structure by which a company structures the ownership of an asset so that -
