Complicated accounting rules must guide a presentation of the effects of a financial lease on the lessee’s balance sheet and income statement. FASB Statement 13 requires the firm to capitalize lease payments and list the leased property as an asset (‘‘leased property under capital lease’’) and as a liability (‘‘obligations under capital lease’’). The rationale for this accounting treatment is straightforward. Since the financing lease is a long-term, fixed obligation to the firm, it should be treated like similar liabilities. The firm’s long-term access to the leased asset and liability accounts are amortized to zero over time under the FASB 13 treatment. The income statement deduction includes both the amortization of the liability and an imputed interest expense on the remaining lease liability.