Capital Lease

A lease that meets one or more of the following criteria:

• Lease term is greater than 75% of the equipment's estimated economic life.
• Lease contains an option to purchase the equipment for less than fair market value.
• Ownership of the equipment is transferred to the University at the end of the lease term.
• Present value of the lease payments exceeds 90% of the fair market value of the equipment.

The value of future payments is significant to the University and requires recognition as a long-term debt in the University's annual audited financial report (as determined by Financial Reporting).  A capital lease of equipment transfers all benefits and risks inherent in ownership to the University.