Debate 131 Operating versus Capital Leases

Under SFAS No. 13, leases that do not meet one of the four criteria for a capital lease are treated as operating leases. Team Debate:

Team 1: Argue for the capitalization of leases that do not meet any of the FASB ASC 840 criteria for a capital lease. Your argument should take into consideration the conceptual framework definitions of assets and liabilities. Team 2: Argue against the capitalization of leases that do not meet any of the FASB ASC 840 criteria for a capital lease. Your argument should take into consideration the matching principle and full disclosure.

*** Choose the position that you feel is best supported (Team 1 or Team 2) and present your argument.