Which of the following is the best definition of an operating lease?

Multiple Choice

• A leveraged lease is a tax-oriented lease involving three parties: a lessee, a lessor, and a lender.
• A shorter-term lease where the lessor is responsible for insurance, taxes, and upkeep.
• A financial lease in which the lessor is the owner for tax purposes. Also called a true lease or a tax lease.
• A financial lease in which the lessee sells an asset to the lessor and then leases it back.
• A longer-term, fully amortized lease under which the lessee is responsible for upkeep. Usually not cancellable with-out penalty.

Which of the following is the best definition of an operating lease?

A financial lease in which the lessee sells an asset to the lessor and then leases it back.

What is the operating lease?

The operating lease, which is the term that concerns us, is a commercial contract through which the owner of an asset transfers the right of use to another person in exchange for the payment of a periodic fee.

Best Regards!

Step-by-step explanation

Which of the following is the best definition of an operating lease?

Multiple Choice

• A leveraged lease is a tax-oriented lease involving three parties: a lessee, a lessor, and a lender.
• A shorter-term lease where the lessor is responsible for insurance, taxes, and upkeep.
• A financial lease in which the lessor is the owner for tax purposes. Also called a true lease or a tax lease.
• A financial lease in which the lessee sells an asset to the lessor and then leases it back.
• A longer-term, fully amortized lease under which the lessee is responsible for upkeep. Usually not cancellable with-out penalty.