What does Classification of lease - Lessor mean？

The classification of lease - lessor refers to the categorization of a lease agreement from the perspective of the lessor, who is the owner of the asset being leased. This classification is important for accounting and taxation purposes, as it determines how the lessor should recognize and report the lease income and related expenses. The main types of lease classification for lessors are operating leases and finance leases, which differ in terms of how they transfer risks and rewards associated with the leased asset between the lessor and the lessee.