P Corp. leased an asset to L Corp. using an operating lease in February. P Corp.'s December 31 statement of cash flows will report
A)a cash outflow from investing activities.
B)a cash outflow from financing activities.
C)a cash inflow from operating activities.
D)no cash outflow.Rent payments for operating leases are reported in a statement of cash flows as financing activities by the lessee and investing activities by the lessor.

Question

Quizplus · Accepted Answer

Cash inflows from operating activities would include the lease payments received from L Corp. as they are considered revenue earned from the company's primary business operations. As P Corp. is the lessor in this operating lease, there would be no impact on investing or financing activities in the statement of cash flows.

P Corp Leased an Asset to L Corp