operating lease

Operating Lease

An operating lease is a contract that allows for the use of an asset but does not convey rights of ownership of the asset. An operating lease represents an off-balance sheet financing of assets, where a leased asset and associated liabilities of future rent payments are not included on the balance sheet of a company provided that the term is under 12 months or the asset is worth less than $10,000.

Benefits :

  • Lease rentals may be off-balance sheet for lease terms less than 12 months.
  • Tax deductible repayments.
  • Preserves working capital.
  • End of term asset can be handed back.

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