Accounting Dictionary

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Sublease

Definition: A sublease arises when leased property is leased by the original lessee to a third party.  When this happens, the original lessee accounts for the sublease as though it were the original lessor.  This means that it can account for the lease as an operating, direct sales, or sales-type lease.  The original lessee continues to account for its ongoing lease payments to the original lessor as though the sublease did not exist.