Operating leases help to shift the risk of obsolescence from the user to the lessor.

Question

Quizplus · Accepted Answer

Operating leases allow the lessee to use an asset for a certain period without assuming ownership or the risks associated with it, such as obsolescence or declining value. The lessor bears the risk of obsolescence because they retain ownership of the asset and must bear the cost of replacing or updating it at the end of the lease term.

Operating Leases Help to Shift the Risk of Obsolescence from the User