Off-Balance-Sheet Financing

Off-Balance-Sheet Financing - Off-Balance-Sheet Financing...

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Off-Balance-Sheet Financing
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Off-Balance-Sheet Financing Off-balance-sheet financing means that either assets or liabilities, or both, are not reported on the face of the balance sheet. Managers generally believe that keeping such assets and liabilities off the balance sheet improves market perception of their operating performance and financial condition. Empirical evidence suggests that analysts adjust balance sheets to include assets and liabilities that managers exclude.
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Leasing A lease is a contract between the owner of an asset (the lessor) and the party desiring to use that asset (the lessee). Generally, leases provide for the following terms: 1. The lessor allows the lessee the unrestricted right to use the asset during the lease term. 2. The lessee agrees to make periodic payments to the lessor and to maintain the asset. 3. Title to the asset remains with the lessor, who usually retakes possession of the asset at the conclusion of the lease.
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Capital vs. Operating Leases GAAP identifies for two different approaches in the reporting of leases by the lessee:
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Off-Balance-Sheet Financing - Off-Balance-Sheet Financing...

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