What is the theoretical basis for the accounting standard that requires certain longterm leases to be capitalized by the lessee?

Answer 1

 Capital Lease basically means a  lease that meets one or more of the following criteria, meaning it is classified as a purchase by the lessee: the lease term is greater than 75% of the property's estimated economic life; the lease contains an option to purchase the property for less than fair market value; ownership of the property is transferred to the lessee at the end of the lease term; or the present value of the lease payments exceeds 90% of the fair market value of the property.

Answer 2

A liability is an obligation to pay funds in the future (for example debt with a bank).  A long term lease is also an obligation to pay funds in the future and so, some argue, should be shown as an liability also.  Otherwise when looking at the balance sheet what is essentially a commitment to pay funds in the future is not recorded anywhere.

In terms of the asset itself it is being held long term and so the organisation has the rights and benefits of that asset for a long period of time, just as it would if it had bought it outright.  If the organisation uses the asset in this way it should, some would argue, be recorded as an asset on the balance sheet.