A dollar buyout lease is one of the two common traditional lease options. When an organization knows in advance of starting a lease arrangement for a technology solution that they intend to own the leased solution at the end of the term, they will use a $1 buyout lease. A $1 buyout is an ownership program and it is therefore considered a capital expense (CAPEX) lease for accounting purposes.
Additional accounting implications include the requirement to record an asset and its corresponding liability on the balance sheet. The asset will then be depreciated. This program is best suited for customers who know upfront that they want to own the equipment and expect it to meet their needs for a considerable length of time despite the accelerating change in technology the marketplace continues to experience.