DEFINITION of 'Synthetic Lease'

An operating lease that is structured in a way so that it is not recorded as a liability on the balance sheet. Instead, it is considered to be an expense on the income statement.

BREAKING DOWN 'Synthetic Lease'

Basically, a synthetic lease allows a company to control real estate without being required to show the real estate as an asset on the financial statements

  1. Lease Payments

    Lease payments are tied to the terms of different forms of leasing ...
  2. Lease Utilization

    A financial ratio that measures how much a company uses leasing ...
  3. Triple Net Lease

    A triple net lease assigns sole responsibility to the tenant ...
  4. Fixed Price Purchase Option

    The right, but not the obligation, to buy a leased item at a ...
  5. Minimum Lease Payments

    The minimum lease payment is the lowest amount that a lessee ...
  6. Gap Amount

    Insurance will only cover a certain amount of coverage if leased ...
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  1. What kinds of real estate transactions use triple net (NNN) leases?

    Learn how a net-net-net or triple net lease works and why it is popular in commercial real estate transactions. It is also ... Read Answer >>
  2. What is the difference between an income statement and a balance sheet?

    The balance sheet illustrates a company’s book value, and the income statement shows how assets and liabilities are used. Read Answer >>
  3. What are the differences between single, double and triple net leases?

    Learn the ins and outs of net lease agreements, including the key differences between single net, double net and triple net ... Read Answer >>
  4. How are the three major financial statements related to each other?

    Learn why investors analyze a company's financial statements, and how the income statement, balance sheet and cash flow statement ... Read Answer >>
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