A bargain renewal option in a lease agreement gives the lessee the right to extend the lease term at a rate favorable enough that's considerably below market value.
A lease is a contractual agreement in which a lessor grants the lessee the right to use an asset for a specified period in return for specific rental payments. While the lessor retains ownership rights, the lessee gains usage rights.
A financial arrangement where the owner of an asset sells it but retains the right to use it through a lease agreement, effectively raising funds while maintaining the use of the asset.
Off-balance-sheet financing refers to financial arrangements that do not appear on a company's balance sheet, thus not affecting its borrowing capacity as measured by financial ratios. It is commonly seen in operating leases rather than capital leases. GAAP requires disclosure of such financing in financial statements regarding credit, market, and liquidity risk.
An operating lease is a lease agreement that is not a finance lease, in which the lessor retains significant risks and rewards of ownership.
A sale and leaseback transaction involves the owner of an asset selling it and then immediately leasing it back from the buyer. This allows the original owner to continue using the asset while freeing up capital.
