What would be the advantages and disadvantages of leasing assets instead of owning them? How would the financial statements be different in a leasing situation (for both operating leases and capital leases) for the lessee? Please let me know if you have any questions?
Now why is it important from an accounting perspective to classify a lease into operating or capital lease? What is the criteria to classify the lease into operating and capital lease? Do you think the lessee tends to prefer an operating lease or a capital lease? Why? Please let me know if you have any questions.