Corporate Finance
A capital lease, also known as a finance lease, is a lease agreement that allows the lessee to acquire the benefits and risks of ownership of an asset, even though the legal title remains with the lessor. This type of lease is usually long-term and provides the lessee with the right to purchase the asset at the end of the lease term for a predetermined price. Capital leases are significant because they affect both the lessee's balance sheet and cash flow, as they are typically recorded as assets and liabilities.
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