The essence of the treatment of long-term, non-cancelable leases is the same as if the company had borrowed the money and bought the asset.

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Long-term, non-cancelable leases require the lessee to make a series of lease payments over the lease term, similar to making loan payments on borrowed money. Therefore, the treatment of these leases is similar to if the company had borrowed the money and bought the asset.

The Essence of the Treatment of Long-Term, Non-Cancelable Leases Is