what are operating leases used for 
operating leases allow companies greater flexibility to upgrade assets like equipment which reduces the risk of obsolescence there is no ownership risk and payments are considered to be operating expenses and tax deductible finally the risks and benefits remain with the lessor as the lessee is only liable for the maintenance costs the bottom lineoperating leases are leases a business might use to rent assets rather than buy them outright many small and medium sized businesses cannot afford some of the expensive assets they need to operate so it makes sense for them and it s cheaper to rent them businesses must account for operating leases as assets and liabilities for assets leased for more than 12 months this standard makes their balance sheet a more realistic representation of the company s worth and obligations regarding leases 