Share
Explore BrainMass

What distinguishes an operating lease and a financial lease?

1. Distinguish between operating leases and financial leases. Would you be more likely to find an operating lease employed for a fleet of trucks or for a manufacturing plant?

Would you be more likely to find that lessees are high or low income tax brackets as compared with lessors?

Solution Preview

1. Distinguish between operating leases and financial leases. Would you be more likely to find an operating lease employed for a fleet of trucks or for a manufacturing plant?

A financial lease is usually another form of lending where the lessee instead of buying the equipment and taking loan from the bank (or any other source), leases the equipment. The four main criteria for differentiating between operating lease and financial lease are:
1. In financial lease the lessor transfers ownership of the property to the lessee at the end of the lease term. In ...

Solution Summary

Main criteria for differentiating between an operating lease and a financial lease are addressed and a short discussion is given in 359 words.

$2.19