international income earned

Betty Bookkeeper explains the difference between an Operating Lease and a Capital Lease – August 2016

/in /by

Hi Betty 

Please explain the difference between an Operating Lease and a Capital Lease?

Regards,
Colleen

Hi Colleen

An Operating Lease is treated like renting. Payments are considered operational expenses, and the asset being leased stays off the balance sheet.

In contrast, a Capital Lease is more like a loan. The asset is treated as being owned by the lessee, so it stays on the balance sheet.

Hope that helps!

Don’t forget that I’m here to answer your questions about the ICBA, or just queries about your accounting at work. All you have to do is email me!