A capital leased asset would appear on the balance sheet as
A)current liability.
B)capital Lease liability.
C)current asset.
D)prepaid lease expense.

Question

Quizplus · Accepted Answer

A capital leased asset would appear on the balance sheet as a capital lease liability because the lessee (the company leasing the asset) is required to recognize the asset as if they had purchased it with borrowed funds. This means that the asset and the related liability are recorded on the balance sheet and depreciated over the lease term. It is not a current liability because it is a noncurrent obligation that is recognized over the lease term. It is also not a current asset because the lessee does not own the asset and cannot use it to generate revenue in the short term. Similarly, it is not a prepaid lease expense because the lessee does not make any upfront payments for the asset. Rather, the lease payments are made over the lease term.

A Capital Leased Asset Would Appear on the Balance Sheet