Operating Lease FASB13
Operating Leases FASB13– The FASB13 operating lease has very stringent requirements and is generally applicable to equipment that becomes obsolete quickly. These leases usually have purchase options of 10 percent, 20 percent, or fair market value. At the end of the lease, you have the option to send the equipment back or purchase it for the stated purchase option. Advantages include:

Low monthly payments: In most cases the payment for the lease term is less than 90% of the original equipment cost.
 

Tax benefits: Payments can be written off as an operating expense for tax and accounting purposes.
 

Off balance sheet treatment possible.
 

Minimizes risk of ownership.

End of term options include:
Purchase of the equipment for stated purchase option
 

Renewal of the lease
 

Return of the equipment