An operating lease is a lease whose term is short compared to the useful life of the asset or piece of equipment (an airliner, a ship, etc.) being leased.An operating lease is commonly used to acquire equipment on a relatively short-term basis.A depreciation method, such as the Modified Accelerated Cost Recovery System (IRS tax depreciation), that allows write-offs more quickly than the straight-line method, which allows write-offs in equal increments as tax deductions in each tax year.This depreciation deductions useful for companies with tax liabilities as it offsets taxable income.Please read our cookie notice for more information on the cookies we use and how to delete or block them.The full functionality of our site is not supported on your browser version, or you may have 'compatibility mode' selected.
Paragraphs in each section contain the actual accounting guidance, and the numbering will remain consistent going forward (i.e., new accounting guidance added between existing paragraphs will be given a letter designation).
When controlling the asset’s use, the customer has both the right to obtain substantially all the economic benefits from using the asset and the right to direct the use of the asset.
The most significant difference between the old and new definitions of a lease is the elimination of the condition in ASC 840-10-15-6(c) relating to control by a purchaser over the economic output of an asset.
The projected completion of the project is now 2014.
As of the second Exposure Draft in 2013, the boards are considering retaining the single, straight-line lease expense profile of operating lease accounting, though assets and liabilities would still be reported.