A lease in which the payments made to the lessor will return the cost of the leased asset, plus the cost of financing and overhead, as well as an acceptable return on the investment. Late Charges A contractual financial penalty that is imposed when the delinquency of a payment due exceeds the grace period. With a Government user, late charges are subject to compliance with the Prompt Payment Act.
A lease which qualifies (for FAS 13 purposes) as either a direct financing or sales-type (direct from the vendor) lease. Generally, a lease in which the cash flows from "firm" rentals will provide the lessor with an acceptable return on investment, including the cost of the leased equipment, and factoring in overhead and cost of financing.
A lease whereby the cash flows pay the Lessor the full equipment cost plus a predetermined amount over the lease term.