Do capital leases count as debt
When a lease is classified as an operating lease, the lease expenses are treated as operating expense and the operating lease does not show up as part of the capital of the firm. When a lease is classified as a capital lease, the present value of the lease expenses is treated as debt, and interest is imputed on this amount and shown as part of the income statement.Longterm Debt and Capital Lease Obligations. Sum of the carrying values as of the balance sheet date of all longterm debt, which is debt initially having maturities due after one year from the balance sheet date or beyond the operating cycle, if longer, but excluding the portions thereof scheduled to be repaid within one year or do capital leases count as debt
Feb 13, 2018 Yes. Earlier leases were divided in two categories Operating lease and Capital lease. The operating lease payments were treated as rental expenditure. In the capital lease, however, the lessee records the asset in its books simultaneously with the lease obligation on the liabilities side. The obligation in those cases is classified as debt.