Which statement is correct?
A)In an operating lease,the lessee uses the asset for most of the asset's useful life.
B)The lessee expenses the cost of the lease in the period the benefits are received in an operating lease.
C)An operating lease transfers the risks and rewards from the lessor to the lessee.
D)In an operating lease,the lessee records an asset for the property being used.

Question

Quizplus · Accepted Answer

In an operating lease, the lessee expenses the cost of the lease in the period the benefits are received. This is because the lessee does not own the asset and is essentially renting it for a period of time. The lessor retains ownership and is responsible for all risks and rewards associated with the asset. The lessee does not record an asset on their balance sheet for the property being used since they do not own it. Therefore option B is the correct statement.

Which Statement Is Correct