An operating lease should be recorded in the lessee's accounts at the inception of the lease at an amount equal to
A)the present value of the minimum lease payments less the executory costs included in the minimum lease payments
B)the total value of the future rental payments less any estimated contingent payments
C)the total value of the future rental payments less any executory payments included in the future payments
D)none of these

Question

Quizplus · Accepted Answer

An operating lease is not recorded at the inception of the lease at an amount equal to the present value of the minimum lease payments or any other value related to future payments on the lessee's balance sheet. Instead, lease payments are typically recognized as an expense on a straight-line basis over the lease term, without recording an asset or liability at the inception of the lease.

An Operating Lease Should Be Recorded in the Lessee's Accounts