finance (capital) lease is a lease ,Treatment in the United

Treatment in the United States

Under US accounting standards, a finance (capital) lease is a lease which meets at least one of the following criteria:

* ownership of the asset is transferred to the lessee at the end of the lease term;
* the lease contains a bargain purchase option to buy the equipment at less than fair market value;
* the lease term equals or exceeds 75% of the asset's estimated useful life;
* the present value of the lease payments equals or exceeds 90% of the total original cost of the equipment.

Following the GAAP accounting point of view, such a lease is classified as essentially equivalent to a purchase by the lessee and is capitalized on the lessee's balance sheet. See Statement of Financial Accounting Standards No. 13 (FAS 13) for more details of classification and accounting.