Finance Queries

Finance Queries

In Operating Lease, the lesser transfers the right of usage of the property and not the ownership. After the lease ends the lessee returns the required property to the lesser. As the lessee don't take the risk of the ownership, the expense of lease is treated as operating expense in the income statement. No effect of lease is seen on the balance sheet. On the other hand in the capital lease the lessee assumes some of the risk of ownership and enjoys extra benefits. On the other hand the lease when signed is considered both as a ...