A prevailing theme on this site has been the idea that operating leases must be capitalized when valuing a company. But investors must be careful not to capitalize operating leases twice, which could soon become an easy mistake to make.
When a company acquires control of an asset, it can choose to buy it or lease it. If it buys the asset, but uses debt to finance the purchase, it is essentially the same thing as leasing it. Therefore, to make these two transactions identical on financial statements (since they are essentially the same thing), accounting rules require that longer leases be capitalized, so that the asset purchased and the lease payments owed are capitalized on the balance sheet, as if the asset was purchased using debt.
Vacation Rental Report – Calypso Memories – November 2023
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Another month has gone by and now it’s time for my vacation rental report
for Calypso Memories. We have begun our six months of financial hell. The
expen...
10 hours ago