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A large number of business organisations started resorting lease finance as a major source for funding
their projects which resulted in the accounting standards to responding promptly. IASB and FASB joined
together in 2006 for a project for upgrading the accounting standards for lease transactions. As an
outcome of that the Exposure Draft: Leases, was issued in August 2010.. In the latest draft the above said
boards suggested to bring the operating lease in the picture, more precisely into the balance sheet (Biondi,
et al., 2011). As regarding the accounting, operating Lease was treated as an item in the revenue
expenditure even though it has a significant say in continuing liability for both the parties in the lease
contracts. Normally lease contracts run for more than one year. So the item has to be treated as a liability
instead of being treated as just an expense (Nunung Nuryani et. al. 2015). Thus this paper has aimed to
give additional evidence by using data from Indian listed companies of to support previous findings that
shows the benefits of capitalisation of operating lease in decision making of investors.