What Is the Primary Accounting Issue for Lessors

question 49

Multiple Choice

What is the primary accounting issue for lessors?

• A) Off-balance sheet financing.
• B) Revenue recognition and expense allocation over the lease term.
• C) Treating the lease in the same manner as the lessee does.
• D) Determining whether the lease is a sales-type lease or a direct financing lease.

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Definitions:

Worksheet

A paper or digital document used to organize and plan out data or calculations, often used in accounting and finance.

Adjustments

At the conclusion of an accounting cycle, transactions recorded in financial documents to apportion revenues and costs to the true period of occurrence.

Ledger

The entire group of accounts maintained by a company.

Depreciation Expense Account

Represents the cost allocated for the reduction in the value of a tangible fixed asset over its useful life.