Operating vs Financial lease The classification of a lease should depend on the economic substance of the transaction rather than a literal application of the guidelines in AAS17 Provided that substantially all of the risks and benefits associated with ownership are effectively transferred to the lessee, the lease is then a financial lease and should be capitalisedOperating vs Financial Lease ◼ The classification of a lease should depend on the economic substance of the transaction rather than a literal application of the guidelines in AAS17. ◼ Provided that substantially all of the risks and benefits associated with ownership are effectively transferred to the lessee, the lease is then a financial lease and should be capitalised