Short-term leases are a type of business contract that covers the rental of assets for periods of 12 months or less. It’s important to understand what short-term lease accounting is and how it works within your financial operations. Under short-term lease accounting, leased assets are recorded as either expenses or assets depending on the period they are used. Any lease longer than 12 months must be recorded as an asset and amortized over the life of the lease in accordance with US GAAP standards. When it comes to short-term leases, both lessee and lessor can benefit from tracking costs more accurately. By understanding the nuances of short-term leases within your business, you’ll be able to make smarter financial decisions to maximize profits and minimize overhead costs.