What is the difference between an operating lease and a finance lease?

First, the role is different.

Because the leasing company can provide ready-made financial leasing assets, so that the enterprise can be obtained and installed in a very short period of time with a small amount of funds, and can quickly play a role and produce benefits, therefore, the financial leasing behavior can enable the enterprise to shorten the construction period of the project, effectively avoid market risks, and at the same time, avoid the enterprise due to insufficient funds and let go of fleeting market opportunities.

Operating leases enable enterprises to selectively lease assets that they urgently need but do not want to own. In particular, equipment with high process level and fast upgrading is more suitable for operating leasing.

Second, the leasing procedure is different.

The equipment leased by the operating lease is selected by the leasing company according to the needs of the market, and then the tenant is found.

The equipment leased by the financial lease shall be purchased at the request of the lessee or selected by the lessee directly from the manufacturer or seller.

Third, the characteristics are different.

Operating leases are voidable. During the contract period, the lessee may terminate the contract and return the equipment in order to lease more advanced equipment;

At the expiration of the lease term, the ownership of the leased assets is transferred to the lessee.

Fourth, the lease term is different.

The operating lease term is shorter, which is shorter than the effective life of the asset, whereas the lease term of the financial lease is longer, which is close to the effective life of the asset.

Fifth, the responsibility for equipment repair and maintenance is different.

Operating leases are the responsibility of the leasing company, while financial leases are the responsibility of the lessee.

Financial leasing can enable enterprises to shorten the construction period of the project, effectively avoid market risks, and at the same time, avoid enterprises from letting go of fleeting market opportunities due to insufficient funds. Operating leases enable companies to selectively lease assets that they need urgently but do not want to own. In particular, equipment with high process level and fast upgrading is more suitable for operating leasing.

There are the following differences between financial lease and operating lease: 1. The purpose is different. 2. The judgment methods of the two are different. 3. The leasing procedure is different.

4. The lease term is different. 5. The responsible parties for equipment repair and maintenance are different. 6. After the expiration of the lease period, the equipment disposal method is different.

7. The cost of leasing is calculated differently.

Civil Code of the People's Republic of China

Article 707:Where the lease period is more than six months, it shall be in writing. If the parties have not adopted written form and cannot confirm the term of the lease for more than six months under Article 707, they shall adopt written form. If the parties do not adopt written form and cannot determine the term of the lease, it shall be deemed to be an indefinite lease.

If the lease term is fixed, it shall be regarded as an indefinite lease.

Article 710 If the lessee uses the leased property in accordance with the agreed method or according to the nature of the leased thing, resulting in the loss of the leased thing, it shall not be liable for compensation.

Article 715 With the consent of the lessor, the lessee may improve or add other things to the leased property. If the lessee improves or adds other things to the leased property without the consent of the lessor, the lessor may request the lessee to restore the original rock age or compensate for the loss.

Legal Analysis: First, the purpose of the two is different; Secondly, the leasing procedures of the two are different, the leased object of the financial lease is generally purchased by the lessee, and the operating lease is directly selected from the lessor. Thirdly, there is no different way to dispose of the equipment after the expiration of the lease; Finally, the parties responsible for the repair and maintenance of the equipment are different.

Legal basis: Civil Code of the People's Republic of China Article 735 A financial lease contract is a contract in which the lessor purchases the leased object from the seller according to the lessee's choice of the seller and the leased object, provides it to the lessee for use, and the lessee pays the rent.

1) The purpose is different. An operating lease is an asset leased by the lessee simply to meet the short-term or temporary needs of production and operation; The main purpose of financial leasing is financing, and the lessee has an obvious intention to purchase assets.

2) The risks and rewards are different. The risks and rewards of the assets during the operating lease term remain with the lessor. Whereas, the financial lease is during the lease term, according to:"Substance over form"The leased assets should be regarded as their own assets, and while enjoying the benefits, they should bear the corresponding insurance, depreciation, maintenance and other related expenses.

3) Rights are different. Operating leases, where the lease expires and the lessee can renew the lease, but there is no special right to buy the asset at a bargain and no option to renew the lease or buy at a bargain; At the end of the financial lease term, the lessee can purchase the asset at a low cost or extend the lease term at a preferential rent.

4) The lease is different. Operating leases, with or without a lease; It can be cancelled at any time at the request of one party. In general, a new lease cannot be cancelled under a finance lease.

5) The lease term is different. The lease term of the operating lease is significantly shorter than the useful life of the asset; The main purpose of financial leasing is to finance, and the lease term is generally the effective service life of the asset, and almost all the investment in the leased asset can be recovered through almost one lease.

6) Rent is different.

How to deal with financial lease interest entries?

Financial lease means that the lessor purchases the leased object from the supplier and leases it to the lessee for use according to the specific requirements of the lessee for the leased object and the choice of the supplier, and the lessee pays the rent to the lessor in installments, and the ownership of the leased object belongs to the lessor during the lease period, and the lessee has the right to use the leased object. For financial lease interest, the following accounting entries can be made:

Borrow: fixed assets, projects under construction.

Financing charges are not recognized.

Credit: Long-term payables.

Bank deposits. When paid on time:

Borrow: Long-term payables - financial lease payables.

Bank deposits. Amortization of unrecognized financing expense:

Borrow: Finance Expenses.

Credit: Financing charges are not recognized.

Unrecognized financing costs generally refer to the financing costs incurred due to the insufficient existing funds of the enterprise and the choice to pay in installments when purchasing assets, resulting in the actual payment being greater than the purchase value of the assets, and the difference between the two is the financing costs arising from the deferred payment. Since this cost is incurred throughout the payment period, it is apportioned over the entire period at a reasonable apportionment rate.

1. The purpose is different, the purpose of financial leasing is to obtain the ownership of equipment, and the purpose of operating leasing is not to obtain the ownership of equipment.

2. The two methods of judgment are not the same, the essence of the financial lease is to transfer all the risks and rewards related to the ownership of the asset, while the operating lease only transfers the right to use the asset.

3. The leasing procedures are different, and the equipment for leasing and leasing in Dongyanhu is selected by the leasing company according to the market needs.

Legal Analysis: First, the purpose of the two is different; Secondly, the leasing procedures of the two types are different, the leased object of the financial lease is generally purchased by the lessee, and the operating lease is directly selected from the lessor; Thirdly, the method of disposing of the equipment after the expiration of the lease period is different; Finally, the parties responsible for the repair and maintenance of the equipment are different.

Legal basis: Civil Code of the People's Republic of China Article 735 A financial lease contract is a contract in which the lessor purchases the leased object from the seller according to the lessee's choice of the seller and the leased object, provides it to the lessee for use, and the lessee pays the rent.