Which of the Following Statements About Accounting for Finance Leases

question 11

Multiple Choice

Which of the following statements about accounting for finance leases by lessees is not correct?

• A)the liability reflects the right to use the asset
• B)the asset reflects the right to use the asset
• C)the liability is an obligation to make future lease payments
• D)finance leases represent assets and liabilities of the lessee

---

Definitions:

Present Value

The current assessment of a future sum of money or cash flows, when calculated with an agreed-upon rate of return.

Invest

Directing financial investments towards the achievement of profit or income returns.

Present Value

The current worth of a future sum of money or stream of cash flows given a specified rate of return, often used in the time value of money calculations.