An operating lease has which one of the following characteristics?
A) The economic life of the asset equals the lease term.
B) The lessee has responsibility for the maintenance and insurance.
C) The lease payments recover the full cost of the asset.
D) The lessee can cancel the lease prior to the expiration date.
E) The lease term is relatively long term.

Question

Quizplus · Accepted Answer

An operating lease allows the lessee to cancel the lease prior to the expiration date, unlike a financial lease where the lessee is responsible for the entire lease term. The other characteristics listed (A, B, C, and E) are associated with a financial lease.

An Operating Lease Has Which One of the Following Characteristics