Asked by
Joshua Gomez
on Dec 08, 2024
Verified
Which one of the following statements is correct concerning an operating lease?
A) The leased asset will have a significant residual value at the end of the lease term.
B) The lease will be recorded as a capital lease on the balance sheet of the lessee.
C) The lessor can terminate the lease at any time without penalty.
D) The lease term is generally equal to the economic life of the leased asset.
E) The lessee is responsible for the maintenance and insurance related to the leased asset.
Operating Lease
A lease agreement allowing for the use of an asset without ownership, typically with shorter terms than a finance lease.
Residual Value
The projected valuation of an asset at the completion of its operational life.
Capital Lease
A lease agreement that has the characteristics of a purchase agreement, where the lessee assumes some risks and benefits of ownership.
- Gain familiarity with the basic concepts and categories of leases, encompassing operating, financial, and leveraged leases.
- Determine the obligations and duties of tenants and property owners within different rental contracts.
Verified Answer
SB
Learning Objectives
- Gain familiarity with the basic concepts and categories of leases, encompassing operating, financial, and leveraged leases.
- Determine the obligations and duties of tenants and property owners within different rental contracts.