What Is an Operating Lease?
An operating lease is a contract that allows for the use of an asset but does not convey ownership rights of the asset.
KEY POINTS
- An operating lease is a contract that permits the use of an asset without transferring the ownership rights of said asset.
- GAAP rules govern accounting for operating leases.
- A new FASB rule, effective Dec. 15, 2018, requires that all leases 12 months and longer must be recognized on the balance sheet.