Operating Lease

A short-term contract or lease that allows a lessee to rent an asset from a lessor without transferring ownership of the asset to the lessee. Operating leases are usually less than one year in length. They allow businesses to use an asset without incurring the high expenses of purchasing it.
Operating leases are different from finance leases, which are long-term contracts that transfer ownership of the asset to the lessee. Operating leases resemble rental agreements because the asset is used for a set time, with useful life remaining at the end of the lease.
Operating leases are shown as an asset on the balance sheet, valued as the present value of the lease payments.