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A synthetic lease is a form of off balance sheet financing relying on the company's corporate credit to guarantee financing of the transaction. Since operating leases are off balance sheet transactions, they have come under further scrutiny in the wake of the Enron collapse and that company's use of off balance sheet accounting transactions to hide true financial performance. Synthetic leasing--also known as,, off balance sheet financing--allows a firm to receive tax benefits associated with owning real estate while keeping the associated debt off of its balance sheet. |
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