Firms Account for Leases Using Either the Operating Lease Method

question 237

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 capital, or finance, lease method treats leases equivalent to installment purchases or sales, where the lessee borrows funds from the lessor to purchase the asset and the lessor recognizes profit at the time of sale.
• B)The lessee records the leased asset and the lease liability on the balance sheet at the present value of the contractual cash flows at the time of signing the lease.
• C)The lessee amortizes the leased asset, similar to recognizing depreciation on buildings and equipment.
• D)The lessee recognizes interest expense on the lease liability, similar to recognizing interest expense on long-term notes or bonds.
• E)The lessor records the signing of a capital lease differently than if the lessor sold the leased asset for an installment note receivable.

---

Definitions:

Audience's Ego

Considering and catering to the self-esteem and feelings of the audience in communication efforts.

Resolve Conflicts

The process of finding a peaceful solution to a disagreement among parties, which can involve compromise or the acceptance of tolerance.

Constructively

In a manner that is helpful and positive, aimed at improving or building something rather than criticizing or destroying.

Group Development

Refers to the stages that groups typically go through as they evolve, including forming, storming, norming, performing, and adjourning.