A capital lease involves the transfer of the ownership of the property or asset to the Lessee. As a result, the present market value of the asset is included on the balance sheet.
The lease is considered as a loan and the interest payments are expensed on the income statement. The net value of all the future payments towards the lease is the loan amount that is treated as a liability.
If the present value of the lease payments equal the property's market value, is this value considered the Lessee's cost basis?
