Management Brief 309 MS 2.docx - Management Brief ACC 309 Milestone Two Giselle K Sampson Southern New Hampshire University Capital lease is a type of

Management Brief 309 MS 2.docx - Management Brief ACC 309...

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Management Brief ACC 309 Milestone TwoGiselle K SampsonSouthern New Hampshire University
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Capital lease is a type of lease that allows renters temporary use of assets. This type of lease “has the economic characteristics of asset ownership for accounting purposes,” (Investopedia, 2019). A capital lease is considered the purchase of an asset, as with the case with Peyton Approved. The company rented the six ovens on December 31 for 6 years, with intent of ownership at the end of that time period. Compared to an operating lease which is not recorded on the balance sheet, a capital lease is considered an asset and is considered a debt as they accumulate interest over time periods. There are factors that must be met in order to be considered a capital lease. Some of these are, “a transfer of ownership of the asset at the end of the term, an option to purchase the asset at a discounted price at the end of the term, the term of
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  • Fall '15
  • capital lease, Peyton

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