Financing lease payments are expensed each period and therefore the lease is not reflected on the balance sheet.

Financing Lease

A lease in which the lessee effectively acquires ownership of the leased asset. Also called a capital lease. Accounted for by showing the leased asset on the balance sheet offset by a liability representing the obligation to make future lease payments. Compare with Operating lease.

Balance Sheet

An accounting report displaying the financial condition of a business, including what it owns, owes, and the equity held by shareholders on a given date.