Info

Assets under capital lease Other assets

$100,000 100,000

Obligations under capital lease Equity

$100,000 100,000

Total assets

$200,000

Total debt plus equity

$200,000

In the first case, a $100,000 truck is purchased with debt. In the second case, an operating lease is used; no balance sheet entries are created. In the third case, a capital (financial) lease is used; the lease payments are capitalized as a liability, and the leased truck appears as an asset.

In the first case, a $100,000 truck is purchased with debt. In the second case, an operating lease is used; no balance sheet entries are created. In the third case, a capital (financial) lease is used; the lease payments are capitalized as a liability, and the leased truck appears as an asset.

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