Because operating leases require the lessee to make rent payments, a liability is created and it must appear on the lessee's balance sheet.

Name: Because operating leases require the lessee to make rent payments, a liability is created and it must appear on the lessee's balance sheet.
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Operating leases do not create a liability on the lessee's balance sheet; instead, they are treated as rental expenses in the income statement.

Because Operating Leases Require the Lessee to Make Rent Payments