What is the result of the on-balance sheet treatment of a lease?

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The on-balance sheet treatment of a lease typically results in recognizing lease obligations as liabilities, which increases the total assets (due to the recognition of right-of-use assets) and liabilities on the balance sheet. This leads to a decreased return on total assets (since the asset base increases without an immediate increase in earnings) and an increased debt ratio (due to the increase in liabilities).

What Is the Result of the On-Balance Sheet Treatment of a Lease