Dictionary of Business and Economic Terms (Barron's Business Dictionaries) by Friedman Jack P

Author:Friedman, Jack P.
Language: eng
Format: epub
Publisher: Barrons Educational Series
Published: 2012-04-09T23:00:00+00:00

FIGURE 6

LEASE BONUS amount paid to induce a lessor to execute a mineral lease.

LEASED FEE the landlord’s ownership interest of a PROPERTY that is under LEASE. Its value is based on the anticipated income from RENT, and the reversionary property value upon lease expiration.

LEASEHOLD estate in real property of a LESSEE, created by a LEASE; generally an estate of fixed duration, but may also describe TENANCY AT WILL, a month-to-month tenancy, etc. The value of a leasehold depends on whether the rent is below market and on the length of the remaining lease term.

LEASEHOLD COSTS costs of purchasing and maintaining a lease. These costs are capitalized as part of the basis of the property.

LEASEHOLD IMPROVEMENTS fixtures, attached to real estate that are generally acquired or installed by the TENANT. Upon expiration of the LEASE the tenant can generally remove them, provided such action does not damage the property or conflict with the lease. For example, the cabinets, light fixtures, and window treatments of a retail store in a leased building are leasehold improvements. See also TENANT FIXTURES.

LEASEHOLD INSURANCE coverage for a tenant (the LESSEE) with a favorable lease (enabling the lessee to rent premises for less than the rental market value). If the lease is canceled by the LESSOR because an insured peril (such as fire) strikes, the lessee is indemnified for the loss incurred. The premise is that the lessee will have to forgo earnings derived from having an advantageous lease, and should be indemnified for this incurred loss.

LEASEHOLD MORTGAGE LIEN on the tenant’s INTEREST in real estate; generally subordinate to other liens on the property.

LEASEHOLD VALUE value of a tenant’s interest in real estate, especially under a long-term lease at below-market rental rates.

LEASE WITH OPTION TO PURCHASE LEASE that gives the lessee (tenant) the right to purchase the property at an agreed-upon price under certain conditions. If a lease bears characteristics similar to a financing device, the arrangement will be treated as financing, not a lease. An option to purchase at FAIR MARKET VALUE would appear to be a lease; by contrast, an option at a bargain price would indicate EQUITY build-up through the “rent” and would be an indication of a purchase with a financing lease.

LEAST-COST PRODUCTION RULE in economics, the principle that maximizing profit requires that each dollar spent on each unit of input produces at least the same dollar value of output.

LEAVE OF ABSENCE approved absence period from work without loss of seniority or other job-related perquisites. A leave of absence is often granted to employees for particular purposes, such as attending an educational program or performing a special research project.

LED (light-emitting diode) electronic display that lights up when the proper current is passed through it.

LEDGER book; in accounting transactions, book of accounts. Contrast with JOURNAL, in which the transactions are initially recorded.

LEFT-CLICK click the left or primary button on a computer mouse.

LEGACY disposition by will of PERSONAL PROPERTY. See also BEQUEST.

LEGACY COST the cost of retiree pension, health insurance, and other benefits to an employer; employment costs that continue after an employee retires.

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