Which of the following statements characterizes an operating lease?
A)The lessee records depreciation and interest.
B)The lessor records depreciation and lease revenue.
C)The lessor transfers title at the end of the lease term.
D)The lessee records a leased asset.

Question

Quizplus · Accepted Answer

An operating lease is a type of lease where the lessor (owner of the asset) transfers the right to use the asset to the lessee (user of the asset) for a certain period of time. In an operating lease, the lessor continues to own the asset and records depreciation on their books. The lessee does not record the leased asset or any related liabilities, but instead records lease payments as rent expenses. The lessor also records lease revenue on their books. Therefore, choice B is the correct statement that characterizes an operating lease.

Which of the Following Statements Characterizes an Operating Lease