Which of the Following Statements Concerning the Accounting for Leases

question 19

Multiple Choice

Which of the following statements concerning the accounting for leases is not true?

• A) The economic impact of a capital lease isn't really any different from buying the asset outright and signing a note payable that will be paid off, with interest, over the life of the asset.
• B) At the inception of a capital lease, the lessee's total assets and total stockholders' equity are both increased for the present value of the lease payments to be made over the life of the lease.
• C) Assets rented under an operating lease are not reflected on the lessee's balance sheet, and the rent expense involved is reported in the income statement as an operating expense.
• D)A capital lease results in the lessee assuming virtually all the benefits and risks of ownership of the leased asset.

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Definitions:

Liminality

A transitional or in-between phase in a rite of passage, characterized by ambiguity and openness to change.

Embarkation

The process of boarding a vehicle or vessel for the purpose of starting a journey or voyage.

Aggregation

The process of collecting and combining multiple pieces of data, information, or objects into a single group or summary form.

Structural Gestation

The process involved in the development and structuring of systems, organizations, or social patterns, especially over time.