A finance type lease arrangement is a lease agreement that transfers the risks and benefits associated with ownership to the lessee.

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A finance lease arrangement is also known as a capital lease and is structured in a way that the lessee assumes the risks and benefits of ownership. The lessee is responsible for maintaining and insuring the asset during the lease term and may have a purchase option at the end of the lease. In contrast, an operating lease is structured in a way that the lessor retains ownership of the asset and assumes the risks and benefits associated with ownership.

A Finance Type Lease Arrangement Is a Lease Agreement That