I need to find an article on operating leases or financial leases. I have to write a 300 word summary

Question

i have to summarize a article for my health care class on operating lease or financial lease. i need to know about where to find this information

Answer 1

Operating Lease

Rental of property between the lessee and lessor for a fee. An operating lease does not meet the criteria for a Capital Lease. An example is renting of an apartment or automobile. The lessee debits rental expense and credits cash. Rental expense should be recognized on a straight-line basis, unless another systematic and rational basis is more representative of the time pattern in which benefit use is derived. The lessee shows nothing about the lease on the balance sheet. Lessee footnote disclosure includes future minimum lease payments in aggregate and for each of the five succeeding fiscal years, contingent rentals, and sublease rentals. The lessor, upon receipt of rental payments, debits cash and credits rental revenue. The lessor also records depreciation expense on the leased item and any expenses related to the leased property, such as maintenance expense. Normal accrual basis accounting techniques are followed for the recognition of income and expense. The lessor reports on his balance sheet the leased asset less accumulated depreciation. Footnote disclosure by the lessor includes the cost of property on lease or held for leasing by major class, minimum future rentals in the aggregate and for each of the five succeeding years, and contingent rentals.

Finance (aka Capital) Lease

One in which the Lessee obtains significant property rights. Although not legally a purchase, Theoretical Substance governs over legal form and requires that the leased property be recorded as an asset on the lessee's books. The asset equals the present value of Minimum Lease Payments. A capital lease exists if any one of the following four criteria is met: (1) the lease transfers ownership of the property to the lessee at the end of the lease term; (2) a Bargain Purchase Option exists; (3) lease term is 75% or more of the life of the property; (4) the present value of minimum lease payments equals or exceeds 90% of the fair value of the property.