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

Question

Quizplus · Accepted Answer

An operating lease is a shorter-term lease where the lessor is responsible for insurance, taxes, and upkeep. The lessee does not own the asset and usually can cancel the lease without penalty.

Which of the Following Is the Best Deﬁnition of an Operating