Which of the Following Statements Concerning Leases Is True

question 18

Multiple Choice

Which of the following statements concerning leases is true?

• A) Finance leases are favored by lessees.
• B) The appearance of the account, Right-of-Use Asset, on the balance sheet, signifies an operating lease.
• C) The portion of a lease liability expected to be paid in the next year is reported as a current liability.
• D) Present value is irrelevant in accounting for leases.

---

Definitions:

Carrying Value

The amount at which an asset is recognized in the balance sheet, subtracting any accumulated depreciation or amortization.

Maturity

The date on which a financial instrument or obligation becomes due and is to be paid or settled.

Face Value

The nominal value printed on a bond or stock certificate, representing its legal value.

Straight-Line Method

A depreciation technique that allocates an equal amount of depreciation expense for an asset over its useful life.