Definition of capital lease as a financial arrangement, Accounting, Basic Statistics

Definition of capital lease as a financial arrangement, Accounting, Basic Statistics

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Definition of capital lease in term of financial arrangement whereby a lessee pays rental for asset.

Capital lease is a financial arrangement underlying a agreement where a lessee uses asset for that a rental is paid. Fundamentally a capital lease covers the 90% of the supportive life of asset along with the option of acquiring the similar at the end of the lease period.

i.e. A factory building build on a land which has been taken on lease of 99 years with specific rentals as indicated by the agreement between lessor & Lessee.

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