In an operating lease, the lessor rents the asset to the lessee for a period of time. Operating leases typically involve the lessor retaining ownership and the lessee using the asset for a specified period without transferring substantially all of the benefits or risks associated with ownership. (option b)
In an operating lease, the lessor rents the asset to the lessee for a defined period, providing temporary usage without transferring substantial ownership benefits. The lessor retains ownership, and the lessee pays periodic rent. Unlike finance leases, operating leases don't usually involve the transfer of the asset's significant benefits or risks to the lessee.
Instead, the lessor maintains a more significant interest in the asset. This arrangement is suitable for short-term or non-core asset needs, and it allows the lessee flexibility without committing to long-term ownership. The lessor typically receives rent, but the lessee doesn't gain substantial control or ownership rights.
Option B is correct.