An Owner of an Asset May Sell It and Then

question 24

True/False

An owner of an asset may sell it and then lease it back from the new owner.Where this lease meets the conditions to be classified as a finance lease,the profit or loss on the sale of the asset recorded by the lessee should be classified as a finance item in the income statement in the year of the sale.

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Definitions:

Equity Securities

Financial instruments representing ownership interest in a corporation, such as stocks.

Debt Securities

Financial instruments representing a loan made by the investor to the issuer, which can include government bonds, corporate bonds, and other types of debts.

Investing Activities

Transactions involving the purchase and sale of long-term assets and other investments, recorded in the cash flow statement.