An operating lease can best be defined as:
A) A short term lease where the lessor is responsible for the insurance, tax and upkeep. Often cancellable on short notice.
B) A longer term, fully amortized lease under which the lessee is responsible for the upkeep. Usually not cancellable without penalty.
C) A financial lease in which the lessor is the owner for tax purposes.
D) A financial lease in which the lessee sells an asset to the lessor and then leases in back.
E) A financial lease where the lessor borrows a substantial of the cost of the leased asset.

Question

Quizplus · Accepted Answer

An operating lease is typically a short-term lease where the lessor retains ownership and responsibility for the asset, including insurance, tax, and maintenance. It often allows for cancellation on short notice, distinguishing it from longer-term, financial, or capital leases where the lessee takes on more responsibilities and risks associated with ownership.

An Operating Lease Can Best Be Defined As