Firms Account for Leases Using Either the Operating Lease Method

question 86

Multiple Choice

Firms account for leases using either the operating lease method or the capital (finance) lease method.Which of the following is not true?

• A)The operating lease method treats leases as executory contracts.
• B)The operating lease method does not recognize a leased asset on the lessee's balance sheet.
• C)The operating lease method does not recognize a lease liability on the lessor's balance sheet.
• D)Under the operating lease method, the lessor recognizes rent revenue as the lessee uses the leased asset over time.
• E)Under the operating lease method, the lessee does not recognize rent expense as the lessee uses the leased asset over time.

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