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| A finance lease usually involves the lessee (user of the asset) paying - over the life of the lease - the full cost of the asset plus a return on the finance effectively provided by the lessor.
| | ''Credit rating'' |
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| The lessee-user effectively retains substantially all the risks and rewards of ownership.
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| However, the lessee does not obtain legal title to the leased asset.
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| Under IAS 17 and SSAP 21, finance leases have to be accounted for 'on balance sheet' by the user of the asset.
| | Fitch Ratings, a leading credit rating agency. |
| This means that the liability to pay (the capital element of) the future lease instalments is recognised and disclosed on the face of the balance sheet.
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| Also known as a ''capital lease'', especially in the US.
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| == See also == | | == See also == |
| * [[Actuarial method]] | | *[[Climate Vulnerability Score]] |
| * [[ED 2010/9]] | | * [[Credit rating]] |
| * [[Finance charge]] | | *[[Credit rating agency]] |
| * [[Hire purchase]] | | *[[ESG Relevance Score]] |
| * [[IAS 17]]
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| * [[Implied rate of interest]]
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| * [[Lease]]
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| * [[Off-balance sheet finance]]
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| * [[Operating lease]]
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| * [[SSAP 21]]
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| ==Other links==
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| [http://www.treasurers.org/node/8924 Students: A Lesson on leases, The Treasurer, April 2013]
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| [[Category:Corporate_finance]] | | [[Category:Treasury_operations_infrastructure]] |
| [[Category:Accounting,_tax_and_regulation]]
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Revision as of 02:42, 14 December 2021
Credit rating
Fitch Ratings, a leading credit rating agency.
See also
