In the earlier years of a lease, from the lessee's perspective, accounting for a leased asset as an operating lease will cause debt to increase, compared to accounting for it as a finance lease. a capital lease will enable the lessee to report higher income in the earlier years, compared to accounting for it as an operating lease. a capital lease will cause debt to increase, compared to accounting for it as an operating lease. an operating lease will cause income to decrease in the earlier years, compared to accounting for it as a finance lease.
