If a lessee enters into a finance lease agreement, it will record:
A) an asset only.
B) a liability only.
C) an asset and a liability.
D) an expense only.

Question

Quizplus · Accepted Answer

In a finance lease agreement, the lessee is considered the owner of the asset being leased, and therefore must record both an asset (representing the leased property) and a liability (representing the obligation to make lease payments). No expense is recorded at the time of entering into the finance lease agreement.

If a Lessee Enters into a Finance Lease Agreement, It