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Synthetic Lease
A lease which is arranged so that it is not shown as a liability on a company's balance sheet but as an expense on the income statement. The item or asset being leased is owned by a special purpose vehicle (SPV) which then leases it to the company. The SPV is usually owned by the company. Synthetic leases have become markedly less common in the United States after the financial scandals of the early 2000s and the introduction of the Public Company Accounting Reform and Investor Protection Act of 2002, better known as Sarbanes-Oxley.
See also: Synthetic Financial Instruments