In what way should operating leases be accounted for under IAS 17?
A)The lease payments should be capitalized and shown on the balance sheet as an asset.
B)The lease payments must be expensed as they are incurred.
C)IAS 17 is flexible,allowing both capitalization and expensing of operating lease costs.
D)The lessee capitalizes the operating lease and the lessor expenses the lease.

Question

Quizplus · Accepted Answer

Under IAS 17, operating leases should be expensed as they are incurred. The lease payments are not capitalized and do not appear on the lessee's balance sheet as an asset. This treatment distinguishes operating leases from finance leases, which require capitalization of the assets and corresponding liabilities.

In What Way Should Operating Leases Be Accounted for Under