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Operating Lease

Operating Lease

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Published by hamarshi2010

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Published by: hamarshi2010 on Dec 23, 2009
Copyright:Attribution Non-commercial


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Operating lease
Operating lease
A lease is classified as an operating lease if itdoes not transfer substantially all the risksand rewards incidental to ownership.It is usually used to get equipment on a short-term basis.
Since firms prefer to keep leases off thebooks, and sometimes prefer to defer expenses, there is a strong incentive onthe part of firms to report all leases asoperating leases.This type of lease is beneficial for businesses who want to keep their leasesout of their financial statement.

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