A capital lease is a lease that transfers most of the risks and benefits of ownership to the lessee.

Question

Quizplus · Accepted Answer

In a capital lease, the lessee is typically responsible for maintenance, insurance, and taxes, which are typical responsibilities of an owner. Additionally, the lessee usually has the option to purchase the asset at the end of the lease term, which further reinforces the transfer of ownership benefits. Therefore, a capital lease is designed to transfer most of the risks and benefits of ownership to the lessee.

A Capital Lease Is a Lease That Transfers Most of the Risks