Capital Lease

A lease considered to have the economic characteristic of asset ownership.

Investopedia Says:
A capital lease is an example of accrual accounting's inclusion of economic events.

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One in which the Lessee obtains significant property rights. Although not legally a purchase, Theoretical Substance governs over legal form and requires that the leased property be recorded as an asset on the lessee's books. The asset equals the present value of Minimum Lease Payments. A capital lease exists if any one of the following four criteria is met: (1) the lease transfers ownership of the property to the lessee at the end of the lease term; (2) a Bargain Purchase Option exists; (3) lease term is 75% or more of the life of the property; (4) the present value of minimum lease payments equals or exceeds 90% of the fair value of the property.