Firms Account for Leases Using Either the Operating Lease Method

question 77

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 lessee's balance sheet.
• D)Under the operating lease method, the lessor does not recognize rent revenue as the lessee uses the leased asset over time.
• E)Under the operating lease method, the lessee recognizes rent expense as the lessee uses the leased asset over time.

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Definitions:

Social Contract

A theoretical agreement within a society regarding the rights and duties of the state and its citizens, often used to justify political or moral obligations.

Labor Utilization

The strategic use and management of human resources to optimize productivity and efficiency in the workplace.

Work Hours

The duration of time that employees spend performing their job duties during a given day or week.

Skill Based Pay

A compensation system that pays employees based on their skills, knowledge, and abilities rather than their job title or position.