What is off-balance-sheet financing?

In: Business and Finance, Investing and Financial Markets

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Also called synthetic leases. This is where a company uses rules from different systems, such as financial and tax, to account for an asset in different ways.

For example, I lease a computer from company A. Because I don't own the computer (and I am assuming this is not a capital lease), I get to take the rent expense (for the lease) as a deduction on the books, but I don't have to account for the asset or the debt.

The lessor (company A) maintains the asset on their books and, if they financed it from another company (company B), the debt as well.

First answer by ID3705815562. Last edit by ID1096483396. Question popularity: 84 [recommend question]

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Off-Balance-Sheet Financing (investment)

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