All of the Following Statements Regarding Leases Are True Except

question 231

Multiple Choice

All of the following statements regarding leases are true except:

• A) For a capital lease the lessee records the leased item as its own asset.
• B) For an operating lease the lessee reports the lease payments as rental expense.
• C) For a capital lease the lessee depreciates the asset acquired under the lease, but for an operating lease the lessee does not.
• D) Capital leases create a long-term liability on the balance sheet, but operating leases do not.
• E) Capital leases do not transfer ownership of the asset under the lease, but operating leases often do.

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Definitions:

Specified

Clearly identified or defined in detail.

Bilateral Contract

A mutual agreement between two parties where each promises to perform an act in exchange for the other's performance.

Offeree

Offeree is a legal term referring to the party to whom an offer is made in contract law, who can then accept, reject, or counteroffer.

Requested Act

A specific action or operation that someone asks or formally requires someone else to perform.