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For a capital lease the lessee records the lease payments

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Operating leases differ from capital leases in that

For a capital lease the lessee records the lease payments as rent expense, but for an operating lease the lessee reports the lease payments as depreciation expense
For an operating lease the lessee depreciates the asset acquired under lease, but for the capital lease the lessee does not
Operating leases create a long-term liability on the balance sheet, but capital leases do not
Operating leases do not transfer ownership of the asset under the lease, but capital leases often do
Operating lease payments are generally greater than capital lease payments

Reference no: EM13480600

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