From a lessee's perspective, highlight main differences between an operating lease and finance lease only in relation to accounting treatment and…

Accounting treatment Operating lease is generally treated like a renting arrangement. Lease payments are treated as operating expenses and asset does not appear as asset in lessee's balance sheet. Finance lease is treated like a loan arrangement Hence, asset ownership is considered of that of lessee and thus appears on the balance sheet of the lessee. Tax benefits Operating lease payment is considered like an expense just as in case of renting. However, no depreciation can be claimed by lessee. In case of finance lease, lessee can claim both interest and depreciation as it is treated like a loan.