4 ms·
I'm not an economist, but leasing an asset like land or machinery doesn't allow a company to lever up its balance sheet.
by saryant 11y ago
I'm not an economist, but leasing an asset like land or machinery doesn't allow a company to lever up its balance sheet.
- rahimnathwani 11y agoSigning a 25-year lease on a piece of land is very similar to borrowing the money to buy the land. You are right, the 25-year lease probably wouldn't show up on the balance sheet as a liability. This reflects a limitation in how we do accounting (backward-looking value measurement), not an underlying difference in the economic reality.