I wanted to create a thread where we could simply and concisely summarize the effects of Operating and Capital lease. On the exam there were some “gimme” type questions referencing both of these. I understand the basic premise and the affects on Net Income etc. but I was unsure how they are accounted for in the various cash flows (OCF vs CFF vs CFI). Can anyone summarize?
if anyone’s interested, here’s a bit of ‘light’ reading on capital vs operating leases http://www.fasab.gov/pdffiles/combinedleasev4.pdf =)