Sales-type lease

An arrangement whereby a firm leases its own equipment, such as Acer leasing its own computers, thereby competing with an independent leasing company.

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True lease
A contract that qualifies as a valid lease agreement under the Internal Revenue code.

Sale and lease-back agreement
Sale of an existing asset to a financial institution that then leases it back to the user.

Safe harbor lease
A lease to transfer tax benefits of ownership (depreciation and debt tax shield) from the lessee, if the lessee could not use them, to a lessor that could use them.

Operating lease
Short-term, cancelable lease. A type of lease in which the period of contract is less than the life of the equipment and the lessor pays all maintenance and servicing costs.

Net lease
A lease arrangement under which the lessee is responsible for all property taxes, maintenance expenses, insurance, and other costs associated with keeping the asset in good working condition.

Limitation on sale-and-leaseback
A bond covenant that restricts in some way a firm's ability to enter into sale and lease-back transactions.

Leveraged lease
A lease arrangement under which the lessor borrows a large proportion of the funds needed to purchase the asset and grants the lender a lien on the assets and a pledge of the lease payments to secure the borrowing.

Lease Rate
The payment per period stated in a lease contract.

Lease
A long-term rental agreement, and a form of secured long-term debt.

Break-even lease payment
The lease payment at which a party to a prospective lease is indifferent between entering and not entering into the lease arrangement.

Capital lease
A lease obligation that has to be capitalized on the balance sheet.

Cost of lease financing
A lease's internal rate of return.

Precious Metals Lease
A vehicle or technique used to finance precious metals inventories. It is related to the term structure of precious metals prices.

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Did you know?

Post-audit

A set of procedures for evaluating a capital budgeting decision after the fact.


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