BLM00230 – Introduction: Lease accounting: Finance lessee’s balance sheet

A finance lessee is required by GAAP separately to show

• the leased asset as its property in its balance sheet even though it doesn't legally own it; and
• the ‘capital’ element it is due to pay in the rentals (the 'loan') as a liability in its balance sheet.

This should make it clear to the world at large just how much the lessee has borrowed.