Equipment Lease

[S T]

Can an equipment lease (has 10% buyout at end) be considered a purchase, and the leasing agreement is just another form of financing at a much higher interest rate?

We would use capitalization cost for amount of purchase and calculate the interest over the term of the lease.

If so, would the equipment then qualify for special allowance and depreciation?

Sandy

[veritas]

If the

lease as you say provides for a nominal buy out at the end of the lease I would treat it as a purchase and a depreciable item.

[Gretel]

Sandy, in addition you might want to check on who has the economical burden if a loss occurs as well as who is paying for taxes, insurance etc.