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All right scholars were now going to take a look at how the various transactions have a net impact on your balance sheet and on your income statement. Lets first of all start with the lessee and remember there are two types of capital leases. Theres the operating capital lease and theres the finance capital lease. When is it a finance capital lease? When she owns it, ownership transfers, written bargain, net present value, economic life or specialized asset. Any one of those met and its a finance capital lease. All of them missed, its an operating capital lease. So lets take a look. When you initially set it up, obviously cash goes down, the asset that youre capitalizing goes up, the liability goes up originally and then of course with each payment the liability goes down. And of course you amortize the actual asset. Now we dont call it amortization, if you recall in my lectures I incorrectly but for descriptive purposes I call it depreciation. I know its called am