Asked by Deepak Karira on Jul 04, 2024
Verified
Under a capital lease, both the leased asset and the related lease obligation are shown on the statement of financial position.
Capital Lease
A lease agreement that is recorded as an asset on a lessee's balance sheet, signifying that the lessee has substantially all the risks and rewards of ownership.
- Differentiate between operating leases and capital leases and analyze their effects on financial statements.
Verified Answer
ZK
Zybrea KnightJul 05, 2024
Final Answer :
True
Explanation :
Under a capital lease (also known as a finance lease under newer accounting standards), the lessee recognizes both the leased asset and the lease obligation on their statement of financial position, reflecting the asset's use and the obligation to make lease payments.
Learning Objectives
- Differentiate between operating leases and capital leases and analyze their effects on financial statements.