Capitalizing Operating Leases

Example #1 - Operating vs. Capital Lease . On July 1, HRES entered into an agreement with an external party to lease a building (an asset with a 35-year useful life) for 20 years. The following details are available: Annual lease payments total $520,000 (paid at the end of each year). Lease bonus of $200,000 to be paid at the lease inception. ................
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