A lease which is treated as a true lease (as opposed to a loan) for book accounting purposes. As defined in FASB 13, an operating lease must have all of the following characteristics:
- the lease transfers ownership of the property to the lessee by the end of the lease term;
- the lease contains a bargain purchase option (i.e., a price which is sufficiently lower than the expected fair value of the property at the date the option becomes exercisable);
- the lease term is equal to 75% or more of the estimated economic life of the leased property; and
- the present value at the beginning of the lease term of the minimum lease payments equals or exceeds 90% of the fair value of the leased property.