Which of the following is an example of an operating lease?

An operating lease is characterized by the way it is treated in accounting, primarily in how it affects the balance sheet of the lessee. In this case, an operating lease is one that is not capitalized on the balance sheet. This means that the lease obligation and the leased asset do not appear as liabilities and assets, respectively, which distinguishes operating leases from capital leases.

Operating leases are typically short-term and allow the lessee to use an asset without assuming the risks associated with ownership. The payments made under an operating lease are treated as operating expenses on the income statement, rather than being capitalized as assets and liabilities. This characteristic allows organizations to maintain a more favorable balance sheet and can appear less leveraged, making it an attractive financing option for many businesses.

In contrast, leases that transfer ownership or have purchase options at fair market value are typically classified as capital leases, which do appear on the balance sheet. Additionally, lessee responsibilities for maintenance often indicate greater control and risk associated with the asset, further leaning towards capital lease classification. Therefore, the correct choice emphasizes the non-capitalization aspect of operating leases in accounting practices.