Terms

An operating lease is a contract that allows for the use of an asset but does not convey rights of ownership of the asset.

More About Operating Lease

  • Represents an off-balance sheet financing of assets
  • The leased asset and associated liabilities of future rent payments are not included on the balance sheet of a company.
  • Don't confuse with a financial lease - these are different!
  • US GAAP rule ASC 842 may now require companies to bring operating leases onto the balance sheet