Minimum lease payments

Minimum lease payments are the smallest total amount that a lessee can expect to pay over the term of a lease. These minimum lease payments are then discounted to derive their present value for the purpose of assigning a value to a capital lease. The lessee then reports a lease asset in the amount of this present value. The amount of minimum lease payments may be increased if the lessee has guaranteed the lessor a residual value for the leased property. The payments do not include any contractual costs that are being paid by the lessor.

Related Courses

Accounting for Leases