A twenty-year lease obligation would appear on the balance sheet as
A)current asset.
B)long-term liability.
C)long-term asset.
D)stockholders' equity.

Question

Quizplus · Accepted Answer

A twenty-year lease obligation is a long-term liability because it involves a contractual agreement to make payments over a period exceeding one year. This obligation represents a future claim on the company's resources, and it is expected to be paid back in more than one year from the balance sheet date. Therefore, it should be classified as a long-term liability.

A Twenty-Year Lease Obligation Would Appear on the Balance Sheet