Typically, financing transactions under $100,000. (U.S. Equipment Leasing Association)

Payments which are not required to be made during a specified interval (e.g., the first payment may be due in 90 days, which would be a “three-month skip”. (Leasing in Canada [Third Edition], Ralph Selby, FCA, Butterworths, 1999)

A capital lease which at the inception of the lease, the fair value of the leased property is greater or less than its carrying amount resulting in a profit or loss. (KPMG LLP)

The sale of a property with the purchaser leasing the property back to the seller. (KPMG LLP)

The estimated fair value of the leased property at the end of the lease term. (KPMG LLP)

The requirement to purchase an asset at a particular time and at a predetermined price. In a lease transaction, this is a lessor’s right to require the lessee (or some third party) to purchase the asset at the end of the lease term. (U.S. Equipment Leasing Association)

[See also Bargain Purchase Option, Fair Market Purchase Option, Fixed Purchase Option]

A provision by which a lessee has the right to purchase the equipment at the end of the lease. The purchase option may be stated at a specified amount or at fair market value. (U.S. Equipment Leasing Association)

The current equivalent of payments or a stream of payments to be received at various times in the future. The present value will vary with discount interest factor applied to future payments. (U.S. Equipment Leasing Association)

This is the interest rate applicable to determine the portion of lease payments that are treated as notional repayments of principal under the April 1989 income tax revisions. The rate is set monthly and is one point greater than the long-term Government of Canada bond rate of the month before the immediately preceding month. (Leasing in Canada [Third Edition], Ralph Selby, FCA, Butterworths, 1999)

Refers to exempt property and assets with a fair market value of $25,000 or less per lease. It is used for the purposes of the federal Income Tax Act Section 16.1 lessor/lessee election introduced in April 1989. (Leasing in Canada [Third Edition], Ralph Selby, FCA, Butterworths, 1999)