What type of lease involves the lessee acquiring ownership benefits and the lessor treating it as a sale?

The type of lease that involves the lessee acquiring ownership benefits and the lessor treating it as a sale is known as a capital lease. In a capital lease, the lessee essentially imitates ownership of the asset over the lease term, which typically spans a significant period, often covering most of the asset's useful life.

Key characteristics of a capital lease include the transfer of ownership rights to the lessee at the end of the lease term, the presence of a bargain purchase option, or the lease term being a substantial part of the asset's useful life. As a result, the lessee recognizes the lease as an asset on their balance sheet, reflecting both the asset and a corresponding liability for the lease payments. This accounting treatment underscores that the arrangement resembles a sale, where the lessee benefits from ownership, such as tax advantages and depreciation.

The other lease types do not carry these attributes. An operating lease, for example, is categorized as a rental agreement where the lessee does not acquire ownership rights, and the lease payments are considered operational expenses rather than long-term assets. Short-term leases typically last for less than a year and do not involve significant ownership benefits. Renewal leases pertain to extending an existing lease and do not inherently involve changes