what is the difference between operating lease ,short term lease and low value lease in d365
In Dynamics 365 Finance, lease classification aligns with IFRS 16 and ASC 842 standards. An operating lease is a standard lease where the lessee does not assume ownership; payments are treated as operating expenses and may not appear on the balance sheet unless required. A short-term lease lasts 12 months or less with no purchase option, and is expensed monthly without creating a right-of-use asset or liability—Dynamics 365 marks it for deferred rent treatment. A low-value lease involves assets below a set threshold (e.g., $5,000), such as tablets or printers, and is also expensed monthly without capitalization. In D365, both short-term and low-value leases are automatically classified as operating leases and flagged for deferred rent, simplifying compliance and reporting.
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