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Leases on the balance sheet
Right-of-use assets and lease liabilities: how leases are recorded, operating vs. finance leases, and how large lease liabilities are at each company.
The short answer
When a company leases a store, an office or equipment for more than a year, it records two things on its balance sheet: a right-of-use asset, for the right to use the property, and a lease liability, for the payments it has committed to. US companies have done this for operating leases since 2019; before that, most leases stayed off the balance sheet. Across the 80 companies here, operating lease liabilities are a median 1.5% of total assets.
How a lease is recorded
At the start of a lease, the company works out the present value of the payments it's committed to and books that amount as a liability. A matching right-of-use asset goes on the other side. Over the lease, the liability shrinks as payments are made and the asset is used up.
Leases come in two kinds. Operating leases, the common kind for stores and offices, show a single straight-line lease cost in operating expenses. Finance leases, which work more like buying the asset with a loan, split the cost into amortization and interest. On the cash flow statement, operating lease payments sit in operating activities, while the principal part of finance lease payments is a financing outflow.
Are leases debt?
Lease liabilities are obligations to pay fixed amounts over time, so many analysts add them to debt when judging how much a company owes. They're usually not counted as debt in a company's own debt figures or in loan covenants, though, and the 10-K reports them on their own lines. When comparing debt-to-equity or net debt, check whether leases are in or out, since retailers and restaurant chains can have lease liabilities as large as their borrowings.
Where to find it
The balance sheet shows operating lease right-of-use assets and lease liabilities, sometimes folded into other lines. The leases note gives the details: the split between operating and finance leases, the weighted-average remaining lease term and discount rate, and a table of future payments by year.
Every company
Starbucks has the largest operating lease liabilities relative to total assets, $10.5B against assets of $32.0B. Its right-of-use assets were $9.3B.
Total assets and operating lease liabilities (current and long-term together) at the latest fiscal year end, from each 10-K, sorted by the last column. Finance leases are not included. Banks are left out.
Common questions
Are leases on the balance sheet?
Yes. Since 2019, US companies record leases longer than a year as a right-of-use asset and a lease liability.
What is a right-of-use asset?
The asset recorded for the right to use a leased property or piece of equipment over the lease term.
What is the difference between an operating lease and a finance lease?
An operating lease shows one straight-line cost in operating expenses. A finance lease splits the cost into amortization and interest, like an asset bought with a loan.
Are lease liabilities debt?
They're fixed payment obligations, so many analysts treat them like debt, but companies report them separately and usually leave them out of their own debt totals.
Where are lease details in a 10-K?
In the leases note to the financial statements, which gives the future payments by year, the remaining term and the discount rate.
Disclosures
- Editor holdings
- The editor holds shares of Tesla (TSLA) and SpaceX in a long-term retirement account. The editor holds no position in any other company named on this page. As of Nov 11, 2026.
- Compensation
- Nobody paid for this page. No affiliate links on this page.
- Sources
- Each company's own SEC filings, linked next to each number.
- Last updated
- Nov 9, 2026
General education, the same for every reader. Not a recommendation to buy, sell or hold any security, and it doesn't consider your situation.
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