Which one of the following is generally NOT a characteristic of an operating lease?
A) The lessor maintains the asset.
B) Cost of asset is less than total amount of lease payments.
C) Asset has residual value at end of lease term.
D) Short-term lease duration.
E) Lease term is less than the economic life of the leased asset.

Question

Quizplus · Accepted Answer

Operating leases typically involve the lessee paying less over the lease term than the actual cost of the asset, contrary to choice B which suggests the total lease payments exceed the cost of the asset. This characteristic is more aligned with finance leases where the lessee effectively pays for the entire cost of the asset over the lease term.

Which One of the Following Is Generally NOT a Characteristic