$1)$ Operating leases are contractual arrangements that allow a company to buy the use of the asset, but not the asset itself $($so it's like a rental$).$ It used to be that these sorts of arrangements didn't need to be reported in the asset$-$using company's $($the "lessee's"$)$ financial statements.$$The lessees loved that.$$ Why do you think they loved that old system, and why do you think the accounting regulators changed it$?$Think: What statements would have been affected under the old system for reporting operating leases?