In a true lease, what happens at the end of the lease term?

In a true lease, the fundamental characteristic is that the lessee does not acquire ownership of the asset at any point during the lease term. At the end of the lease term, the standard procedure is for the jurisdiction to return the asset to the vendor. This reflects the temporary nature of the lease agreement, where the lessee benefits from using the asset without bearing the responsibilities of ownership.

The rationale behind this arrangement is to allow entities to utilize equipment or property without the need for a significant capital outlay or long-term investment commitment. This is particularly beneficial for organizations that may prefer flexibility for changing technology or operational needs. By returning the asset, the jurisdiction can avoid maintenance costs and the depreciation associated with ownership while still accessing the utility of the asset during the lease.