Updated . Educational only — not tax, legal, or lending advice. Confirm figures with your CPA, the state revenue department, and a lender before you close.
A Lease Is Not Off the Books Anymore
For U.S. GAAP reporters, ASC 842 puts most leases longer than 12 months on the balance sheet as a right-of-use asset and a lease liability. The old pitch that leasing “keeps the airplane off the financials” is out of date. Tax treatment can still differ from book treatment. Your CPA draws that line. This page is the accounting and the cash, not the ownership decision. That decision is on lease versus loan in 2026.
What the statements show
- Loan: the aircraft is an asset. The note is a liability. You depreciate the aircraft if you own it for book purposes. Principal payments reduce the liability. Interest is expense.
- Lease under ASC 842: a right-of-use asset and a liability, measured from the lease payments. Operating and finance leases are both on the balance sheet. The expense pattern differs. Neither one means “no liability.”
Cash is the part the lender cares about
Lenders do not underwrite your footnote. They underwrite cash. A loan has a down payment, a sales-tax wire, and a payment you can model in the calculator, plus maintenance you still pay. A lease has payments, reserves, and a return-condition bill, and usually no asset you can sell. Compare those checks. Then ask the CPA which contract gets bonus depreciation. A lessee often does not.
Small operators who are not GAAP reporters still should not believe a salesperson who says the lease is invisible to a bank. The bank will ask for the lease and add the payment to debt service.
Questions buyers actually ask
Does ASC 842 apply to me?
It applies to companies that report under U.S. GAAP. A personal owner does not have a balance sheet the standard cares about. The cash comparison still does.
Is a finance lease just a loan?
Economically it can be close. Legally the lessor may still hold title. Read who can sell the aircraft and who insures it.