If the Lessee and the Lessor Use Different Interest Rates

question 41

Multiple Choice

If the lessee and the lessor use different interest rates to account for a capital lease,then

• A) the lease will never be accounted for as a capital lease by the lessee.
• B) total expenses (or revenues)will be equal for both lessee and lessor.
• C) total expenses (or revenues)will be different for the lessee and the lessor.
• D) GAAP has been violated since the lessor and the lessee are not allowed to use different interest rates in accounting for capital leases.

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