Changes

A '''lease''' is where equipment or property is rented by one person or business from another.  A lease normally implies a longer term contractual term, whereas renting is often considered to be shorter term.  Hence we rent cars for weekend trips but lease them for two years at a time.

A '''lease''' is where equipment or property is rented by one person or [[business]] from another.  A lease normally implies a longer term contractual term, whereas renting is often considered to be shorter term.  Hence we rent cars for weekend trips but lease them for two years at a time.

A lessor is one who owns the asset to be leased and generates revenue from it.  A lessee is the one who uses the asset and pays the owner for the privilege of doing so.

A lessor is one who owns the asset to be leased and generates revenue from it.  A lessee is the one who uses the asset and pays the owner for the privilege of doing so.

Leases usually fall into one of two categories – operating or financial.  An operating lease is such that it does not transfer significant risks and benefits of ownership to the lessee.  A financial or capital lease is really a loan in disguise.  US accounting rules require companies to account for a leased asset as if it were a purchase with a corresponding debt, if one of the following criteria are met:

Leases usually fall into one of two categories – operating or financial.  An operating lease is such that it does not transfer significant risks and benefits of ownership to the lessee.  A financial or capital lease is really a loan in disguise.  [[United States]] accounting rules require companies to account for a leased asset as if it were a purchase with a corresponding debt, if one of the following criteria are met:

#The lease transfers ownership of the property at the end of the term to the lessee.

#The lease transfers ownership of the property at the end of the term to the lessee.