For a finance lease, an amount equal to the present value at the beginning of the lease term of minimum lease payments during the lease term, excluding that portion of the payments representing executory costs such as insurance, maintenance, and property taxes to be paid by the lessor, together with any profit thereon, should be recorded by the lessee as a(n):
A)asset but not a liability.
B)expense.
C)liability but not an asset.
D)asset and a liability.

Question

Quizplus · Accepted Answer

For a finance lease, the lessee records both an asset and a liability on their balance sheet. The asset represents the right to use the leased asset, and the liability represents the obligation to make lease payments.

For a Finance Lease, an Amount Equal to the Present