if capitalize expense, for example, buy a franchise machine, and capitalize the cost instead of pay the cost right away, the capitalization will increase asset only, not liablity. capital lease will increase both asset and liability, that is whay when compare two company with different accounting rule, one is capital lease and anoter is operating lease. the one with operating lease will add the total cost back to asset AND liability. is it? Thanks.
capitalizing expense is reflected as equity position to offset the asset entry the operating lease doesn’t show up on balance sheet. Just costs, not a liability