Last quarter, MSFT announced they are extending the useful lives of their data centers from 15 to 25 years. As a result, their data center leases will shift from finance leases to operating leases. Leases are classified as finance leases if they meet certain criteria. One of the tests is whether the lease covers 75% or more of the data center's life. New construction data centers are typically leased for 15 years (or more), which was 100% of MSFT's old useful life estimate and only 60% of the new useful life estimate. MSFT presents FCF inclusive of finance lease capex but excludes operating leases from the measure. Therefore, capex will look lower, and FCF will look higher as a result of the new accounting estimate. Economically, the leases have not changed substance and still function similarly to funding capex with debt.(zerohedge)