Asked by Brandon Wayne on Jun 14, 2024
Verified
Under a capital lease the lease/asset is reported on the balance sheet under plant assets.
Capital Lease
A contractual arrangement that transfers substantially all the benefits and risks of ownership to the lessee so that the lease is in effect a purchase of the property.
Plant Assets
Long-term tangible assets used in the operation of a business, such as buildings, machinery, and equipment.
- Understand the concept and accounting treatment for capital and operating leases.
Verified Answer
MB
Mohamed Badr El Nemr
Jun 17, 2024
Final Answer :
True
Explanation :
Under a capital lease, the lessee records the leased asset as a fixed asset on its balance sheet and reports depreciation on the leased asset on its income statement.
Learning Objectives
- Understand the concept and accounting treatment for capital and operating leases.
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