Operating Lease vs Finance Lease: Key Differences Explained

Calculator, document folder, and architectural model of office buildings on a desk, illustrating operating lease versus finance lease accounting concepts

Every lease agreement falls into one of two categories — operating or finance — and the label decides how the cost travels through a company’s financial statements. Under current U.S. accounting rules (ASC 842), both types now appear on the balance sheet, which still surprises people who remember when operating leases lived quietly in the … Read more