Final answer:
Captive leasing companies are subsidiaries created to offer leasing services mainly for their parent company. They handle equipment leasing, which can provide tax and financial benefits. This arrangement is common among large corporations looking to efficiently manage their assets.
Step-by-step explanation:
Captive leasing companies are subsidiaries whose primary business is to perform leasing services for the parent company. These companies are often established by a parent company to handle the leasing of equipment and other assets, mainly to external customers, but sometimes back to the parent company or its other subsidiaries. Managing leases through a captive leasing company can offer tax benefits and help in better management of the company's assets. Additionally, this arrangement may provide the parent company with more attractive depreciation and financing terms than those available from third-party leasing companies.