What is a lease? Explain the difference between an operating lease and a finance lease.

A lease is a contractual agreement between a lessor (asset owner)and a lessee (asset renter or tenant)that grants the lessee the right to use the asset for a period of time in return for cash rent payments.Operating leases are long-term leases that do not meet any of the five criteria for a finance lease.Finance leases are long-term leases where the lessee receives substantially all remaining benefits of the asset.The lessee records the leased item as its own asset along with a lease liability at the start of the lease term.Each payment includes interest expense plus a payment on the lease liability.The lessee records amortization expense on the leased asset.