Leases and financial statements

Financial Lease Operating Lease Sale and Leaseback The lessee is responsible for maintenance and can't cancel the lease early. It is also known as a capital lease. The lessor maintains and finances the asset. Maintenance costs are built into the lease payments, and the lessee often has the option of canceling the lease early. It is also known as service lease. A firm arranges to sell a fixed asset (property, plant, or equipment) to another party (often a commercial bank or specialized leasing company) and simultaneously agrees to lease the asset back for a specified period of time at a later date. O