Asked by Morgan Jones on Jun 22, 2024
Verified
An operating lease is cancellable at the option of the lessee.
Operating Lease
A lease agreement for short-term renting of equipment or property where the lessor remains the legal owner, and the lessee only pays for use of the asset.
Cancellable
Refers to a contract or provision within a contract that gives one or more parties the right to terminate the agreement under specific conditions.
- Absorb the nuances distinguishing capital (financial) leases from operating leases.
Verified Answer
SR
SIMONE ROYALJun 24, 2024
Final Answer :
True
Explanation :
An operating lease typically offers flexibility, including options for cancellation, unlike a finance lease which is more akin to a purchase agreement and generally non-cancellable.
Learning Objectives
- Absorb the nuances distinguishing capital (financial) leases from operating leases.