GENERAL ACCOUNTING DIFFERENCES BETWEEN A CAPITAL LEASE AND
AN OPERATING LEASE FROM THE LESSEE'S PERSPECTIVE

From the lessee's perspective, according to FASB there are two types of leases, a capital lease and an operating lease. A capital lease is the same as debt. Creating a long term obligation on a lessee's balance sheet. An operating lease, however, is also referred to off-balance sheet financing because it is not debt and there is only a monthly expense recorded on the profit and loss statement of the lessee.

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