Asked by Mandalyns Watters on Jun 21, 2024
Verified
When a company has an operating lease for its primary premises it would record a lease asset on the balance sheet.
Operating Lease
A lease agreement that allows for the use of an asset but does not transfer ownership of the asset to the lessee, often with shorter terms.
Lease Asset
An asset that is subject to a lease agreement, where the lessee has the right to use the asset for the lease term.
Balance Sheet
A financial statement that summarizes a company's assets, liabilities, and shareholders' equity at a specific point in time, reflecting its financial position.
- Explicate the differentiation between capital and operating leases regarding their impact on financial accounts.
Verified Answer
MC
Marie CynetteJun 21, 2024
Final Answer :
False
Explanation :
Under operating leases, the lessee does not recognize the leased property as an asset on the balance sheet. Instead, it records periodic lease payments as expenses in the income statement.
Learning Objectives
- Explicate the differentiation between capital and operating leases regarding their impact on financial accounts.