When a firm leases a resource for most of its useful life and controls the resource as though it had been purchased, the lease is treated as:
A) an operating lease.
B) a finance lease.
C) a primary lease.
D) a producing lease.

Question

Quizplus · Accepted Answer

When a firm leases a resource for most of its useful life and controls the resource as though it had been purchased, the lease is treated as a finance lease. In a finance lease, the lessee (the firm) has control of the leased asset and bears the risks and rewards of ownership, as if they were the owner of the asset. The lessee recognizes the leased asset as an asset on its balance sheet and also recognizes a corresponding liability for the lease payments.

When a Firm Leases a Resource for Most of Its