How Lessors Report Operating Leases

When a lease is classified as an operating lease, the related assets and liabilities are kept off of the lessee’s balance sheet. Logically, this means that they remain on the lessor’s balance sheet. The lessor’s balance sheet will show the asset, and depreciation of the asset will be counted as an expense on the income statement and reduce the carrying value of the asset.

The lessor will record lease revenue as the lease payments are received.

For more information, see all articles on: Accounting, Common Size Analysis, Financial Statement Analysis, Fundamental Analysis, Ratio Analysis

See also:
  • How Lessors Report Capital Leases Classified as Sales-Type Leases
  • How Lessors Report Capital Leases Classified as Direct Financing
  • Why Do Companies Use Operating Leases?
  • Accounting for Leases: Operating versus Capital Leases
  • Economic Value Added (EVA)
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    The Intelligent Investor: The Classic Text on Value Investing

    Financial Statement Analysis: A Practitioner's Guide, 3rd Edition

    Managing Investment Portfolios: A Dynamic Process (CFA Institute Investment Series)

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