sale of property by the owner to a purchaser who then leases it to the former owner. The net effect of this transaction is similar to a loan to the former owner with the property serving as collateral. Any profit or loss on the sale is deferred and amortized in proportion to the amortization expense on the leased asset if a CAPITAL LEASE,or in proportion to the rental payments if this is an OPERATING LEASE. However, when the fair value of the property at the time of the transaction is less than its book value, a loss will be recognized immediately, up to the amount of the difference between undepreciated cost and fair value.