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8 Cards in this Set
- Front
- Back
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Finance lease |
A lease in which the terms of the lease agreement transfer the risks and benefits of ownership from the lessor to the lessee |
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Operating lease |
A lease in which the risks and benefits of ownership stay with the lessor |
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Incremental borrowing rate |
The late of interest the lessee would have to pay on a similar lease, or if not determinable, the rate that at the inception of the lease the lessee would incur to borrow over a similar term the similar security the funds necessary to purchase the asset |
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Initial indirect costs |
Costs directly associated with negotiating and executing lease agreements |
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Direct financing lease |
A finance lease that is not a lease involving a manufacturer or dealer in which the lessor acquires legal title to an asset then transfers the risks and rewards of ownership of the asset to a lessee for lease payments |
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Net investment in lease |
The gross investment in the lease discounted at the interest rate implicit in the lease |
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Initial indirect costs |
Incremental costs that are directly attributable to negotiating and arranging a lease, except for such costs incurred by manufacturing or dealor lessors |
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Recovery of executory costs |
Costs that are related specifically to the operation and maintenance of leased items |
