Definitions in Equipment Leasing

Capital Lease

A capital lease is a lease in which the lessor only finances the leased asset, and all other rights of ownership transfer to the lessee. This results in the recordation of the asset as the lessee’s property in its general ledger, as a fixed asset. The lessee can only record the interest portion of a capital lease payment as expense, as opposed to the amount of the entire lease payment in the case of the more common operating lease. Source


Stretch Lease

Term commonly used in Canada. In US called First Amendment Lease. Stretches term of lease. For example- 60 month lease with a FMV purchase at month 60 or a renewal for another 6 months with a walk clause. Used to achieve operating lease status. Source