In a Capital Lease, what do lessees assume?

In a Capital Lease, lessees assume the risk of ownership and the benefits associated with the asset. This means that, from an accounting and economic perspective, although the lessee does not legally own the asset, they take on many of the financial responsibilities and advantages as if they did.

Under a capital lease (or finance lease), the lessee records the asset on their balance sheet, reflecting both the asset and the associated liability from the lease payments. This arrangement typically indicates that the lease transfers substantially all the risks and rewards of ownership to the lessee, such as the obligation to maintain the asset, while also allowing the lessee to benefit from its use.

The nature of capital leases often implies that the lessee has a long-term commitment, and they are usually responsible for the asset's depreciation and any potential residual value risk at the end of the lease term. This is fundamentally different from an operating lease, where the lessor retains much of the risk of ownership.

Considering the other options, maintenance costs typically remain the responsibility of the lessee in a capital lease, but this is not the same as assuming ownership. Full ownership is not transferred in a capital lease; instead, the asset is treated as if it’s owned for accounting