Telecom equipment leasing can have two types, finance lease or operating lease. Finance lease is shown as asset on the balance sheet of the lessee and at the end of the finance lease term, the lessee has the option to return the equipment to the leasing company, increase the lease term and continue to use the equipment or go for an upgrade or can buyout the equipment and take ownership. Once the final payments are cleared (as mentioned in the lease agreement and can differ from the lease payment), the ownership title is transferred to the lessee. It is then that the depreciation and interest is shown on the profit and loss account of the lessee.
The other form of telecom equipment leasing is the operating lease where the lessee agrees to return the equipment to the leasing company at the end of the lease term. However, during the lease term, technology can be upgraded and equipment can be exchanged at the cost of increased monthly rental. Operating lease is not shown on the balance sheet as the lease payments are looked upon as operational expenses.
Source: http://www.alamiwood.com/types-of-telecom-equipment-leasing/63/
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