Operating lease is a lease agreement whose basic meaning is the use of the leased asset but does not convey ownership rights of the asset.
Operating lease is in practice often identified with a rent. The difference is in flexibility and adaptability in favor of operating lease while the rental contract is mostly standardized by the regulations of the Civil Obligations Act. The purpose of an operating lease is to finance the lessee, not to actually lease the asset.
The most commonly used form of operating lease is operating a collateral lease. The agreed guarantee serves as a security for the lessor in case of the irregular payment due or other potential risks that remain on the leasing company.
It is important to emphasize that most of the risks but also the benefits associated with the ownership of the leased asset remain with the lessor. The lessee in this type of lease doesn´t have a specific option to purchase the object of lease and after the expiration of the agreed term of the lease, the leased asset is returned to the lessor. There is a possibility for the lessee to purchase the leased asset after the expiration of the contract, but only at a price that represents the market price of the asset at the time of purchase.
The accounting treatment of an operating lease, regardless of the fact that the lessee realizes all the benefits of the leased item as if it were his, requires the presentation of the cost of the lease, which is one of the major advantages of an operating lease. In that way, the company does not show a rental obligation during the entire period of the lease agreement (this obligation is presented gradually upon receipt of the monthly invoice), which means that it has a better credit rating and additional space for possible other creditworthiness.