If as part of the accounting for a lease, the company debits an asset and credits a liability, then the lease must be a(n):
A)operating lease.
B)capital lease.
C)cancelable lease.
D)fixed asset lease.

Question

Quizplus · Accepted Answer

When a company debits an asset and credits a liability as part of the accounting for a lease, it is indicating that the lease is a capital lease. Under a capital lease, the leased asset is recognized on the balance sheet as an asset, and the present value of future lease payments is recognized as a liability.

If as Part of the Accounting for a Lease, the Company