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This tutorial discusses the impact of different transactions on the balance sheet and income statement, focusing on capital leases. There are two types: operating and finance. A finance lease occurs when ownership transfers, written bargain, net present value, economic life, or specialized asset criteria are met. Initial setup involves cash decrease, asset increase, and liability increase. With each payment, the liability decreases and the asset is amortized, which is often referred to as depreciation for descriptive purposes.
