This excerpt taken from the IBAS 8-K filed Dec 17, 2007.
Capital leases, which meet specific criteria noted in SFAS No. 13, Accounting for leases, (FAS 13) are capitalized at the inception of the lease at the present value of the minimum lease payments. All other leases are accounted for as operating leases. Lease payments for capital leases are apportioned to interest expense and a reduction of the lease liability so as to achieve a constant rate of interest on the remaining balance of the liability. Capitalized leased assets are depreciated over the shorter of the estimated useful life of the asset or the lease term. Operating lease payments are recognized as an expense on a straight-line basis over the corresponding lease term.