Operating Lease
A lease treated as a rental arrangement rather than a purchase, where the business uses the equipment without taking on the risks or benefits of ownership.
An operating lease generally keeps the equipment off the business’s balance sheet as an owned asset, with payments simply recorded as an operating expense, which some businesses prefer for its simpler accounting treatment.
At the end of an operating lease, the equipment is typically returned to the lessor rather than purchased, making it a good fit for equipment that a business expects to upgrade or replace regularly.
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