Capital Lease The PV of the payments is at least 90% of the fair market value of the asset. The lease transfers ownership of the property to the lessee by the end of the term of the lease. The lease term is 75%or more of the estimated economic life of the asset. The lessee can purchase the asset at a price below fair market value at the end. slide 5
slide 5 Capital Lease Capital Lease The PV of the payments is at least 90% of the fair market value of the asset. The lease transfers ownership of the property to the lessee by the end of the term of the lease. The lease term is 75% or more of the estimated economic life of the asset. The lessee can purchase the asset at a price below fair market value at the end
Sale and Lease-Back A company sells an asset it owns to another firm and immediately lease it back. The lessee receives cash from the sale of the asset. -The lessee makes periodic lease payments,thereby retaining use of asset slide 6
slide 6 Sale and Lease Sale and Lease -Back A company sells an asset it owns to another firm and immediately lease it back. The lessee receives cash from the sale of the asset. The lessee makes periodic lease payments, thereby retaining use of asset