Which of the following statements regarding leases is CORRECT?
A)Capital leases are favored over operating leases.
B)A debit balance in the Leased Asset account on the balance sheet indicates an operating lease.
C)Title is transferred to the lessee at the end of an operating lease term.
D)Operating leases require the lessee to make rent payments.

Question

Quizplus · Accepted Answer

Operating leases require the lessee to make rent payments. Option A is incorrect because there is no favoritism, it all depends on the accounting treatment. Option B is incorrect because a debit balance in the Leased Asset account can signify either an operating or a capital lease. Option C is incorrect because title is not transferred to the lessee at the end of an operating lease term.

Which of the Following Statements Regarding Leases Is CORRECT