operating lease

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Operating lease

Short-term, cancelable lease. A type of lease in which the contract period is shorter than the life of the equipment, and the lessor pays all maintenance and servicing costs.
Copyright © 2012, Campbell R. Harvey. All Rights Reserved.

Operating Lease

A lease in which the lessee maintains residence or usufruct of the leased property or asset while the lessor may claim a tax deduction on depreciation. For example, if one rents an apartment for a certain period of time and the lessor repossesses the apartment at the end of the lease, is a common example of an operating lease. See also: Off-balance-sheet financing.
Farlex Financial Dictionary. © 2012 Farlex, Inc. All Rights Reserved

operating lease

A short-term lease (such as that of a cable television connection box on a monthly basis) in which rental payments are made by the lessee and full ownership rights are kept by the lessor. An operating lease contrasts with a capital lease in which ownership of the asset effectively passes from the lessor to the lessee.
Wall Street Words: An A to Z Guide to Investment Terms for Today's Investor by David L. Scott. Copyright © 2003 by Houghton Mifflin Company. Published by Houghton Mifflin Company. All rights reserved. All rights reserved.

operating lease

An important accounting and income tax concept having to do with the determination of whether a lease (usually of personal property, but sometimes of real property) is a true lease, or whether it is a disguised lending arrangement. The operating lease is the true lease, and 100 percent of the payments are treated as expenses for accounting purposes and tax deductibility purposes.Sometimes called an off-balance sheet lease,meaning not that the lease is hidden or disguised,but it appears on the profit and loss statement rather than the balance sheet. Contrast with capital lease.In order to qualify as an operating lease,the transaction must meet the following requirements:

• The lease term is less than 75 percent of the estimated economic life of the equipment.

• The present value of lease payments is less than 90 percent of the equipment's fair market value.

• The lease cannot contain a bargain purchase option (i.e., purchase option for less than the fair market value).

• Ownership is retained by the lessor during and after the lease term.

The Complete Real Estate Encyclopedia by Denise L. Evans, JD & O. William Evans, JD. Copyright © 2007 by The McGraw-Hill Companies, Inc.
References in periodicals archive ?
BOC Aviation is a global aircraft operating leasing company and the largest aircraft operating leasing company headquartered in Asia.
One common lease type is the short-term operating leasing agreement.
Finance leasing is more long-term than operating leasing. This type of agreement is more suitable if you want your business to own the aircraft eventually but can't afford it or obtain secured financing.
Standard Chartered Bank has launched its new operating leasing platform for shipping clients in Asia, Africa and the Middle East.
None of the acquiring parties currently has any operating leasing activities in the British rail industry.
Tokyo, Japan, Dec 4, 2006 - (JCN) - Marubeni Corporation, with its US affiliate Marubeni America Corporation, announced on December 4 that it acquired 100% stake in Illinois based freight railcar operating leasing company Midwest Railcar Corporation (MRC).
These including risk- and benefit-sharing arrangements; obligations arising from a contract such as debt factoring; combined sale and repurchase agreements; consignment stock arrangements; "take or pay" arrangements; securitization arranged through separate firms; pledged assets; operating leasing arrangements; and outsourcing.
The 15 managers and staff of IEM, which specialises in aircraft operating leasing, will be transferred to Abbey National as part of the agreement.
BCI Aircraft Leasing Inc, a privately-held operating leasing company, has announced that it signed a letter of intent for a sale and leaseback transaction with Taiwan-based carrier China Airlines.