Question 4 3.13 p Operating leases differ from capital leases in that: Operating leases create a long-term liability on the balance sheet, but capital leases do not. For an operating lease, the lessee depreciates the asset acquired under lease, but for the capital lease, the lessee does not Operating leases do not transfer ownership of the asset under the lease, but capital leases often do. Operating lease payments are generally greater than capital lease payments. For a capital lease, the lessee records the lease payments as rent expense, but for an operating lease, the lessee reports the lease payments as depreciation expense