Policy Steward: 
Director of Financial Accounting and Reporting
Format Updated: 
University Policy & Standards Converted: 
Revision Date: 
Tuesday, December 30, 2014

* This information replaces FIS 502 Lease Reporting


Year-end information regarding capital leases and operating leases is to be provided to the Office of Business Affairs by the dates specified in the Year-End Close Instructions so OSU can comply with their fiscal responsibilities.

For financial accounting and reporting purposes, the lease is a "capital lease" if:

A. the fair market value of the property at the inception of the lease meets or exceeds the capitalization threshold of $5,000,

B. the lease is non-cancelable, and

C. a lease/purchase or capital lease has at least one of the following characteristics:

  • The lease transfers ownership of the property to OSU by the end of the lease term;
  • The lease contains a bargain purchase option;
  • The lease term is equal to 75 percent or more of the useful life of the leased equipment/property; or
  • The total of all lease payments (excluding insurance and maintenance costs and taxes) is greater than or equal to 90 percent of the fair market value of the leased equipment/property.

If a lease does not meet the above criteria, it should be treated as an “operating lease”.

The Leasing and Strategic Real Property Management Office facilitates the sale, acquisition, and lease of University property and manages the drafting and legal processing of real property related documents. All Lease/Purchase agreements must be processed by a PaCS University Contract Officer.

For further information on equipment leasing/purchase see PRO 204: Lease-Purchase in the Property Management Manual.