What does the gross capitalized cost amount on a lease agreement include?

The gross capitalized cost amount on a lease agreement refers to the total value that is being financed in the lease transaction. This figure includes several components crucial for understanding the total cost associated with leasing a vehicle.

Firstly, it encompasses the agreed-upon value of the vehicle, which is essentially the manufacturer's suggested retail price (MSRP) or the negotiated price that reflects the vehicle's worth at the outset of the lease. This is a critical factor because it establishes the baseline for calculating depreciation and other lease-related costs.

Additionally, the gross capitalized cost includes any fees associated with leasing the vehicle. These fees can vary but typically cover administrative costs, acquisition fees, or other initial expenses incurred when setting up the lease agreement.

Taxes are also a significant part of the gross capitalized cost. The applicable taxes for the lease based on state regulations and the vehicle’s purchase price are included as these taxes impact the total amount financed.

By combining all these elements—vehicle value, leasing fees, and taxes—the gross capitalized cost provides a comprehensive view of the financial commitment required within a lease agreement. This all-encompassing approach is why the correct answer is that the gross capitalized cost includes all of the mentioned components.