Which type of lease will NOT increase a company's assets or long-term liabilities?
A)An operating lease.
B)A capital lease.
C)A lease that contains a bargain purchase option.
D)A lease that transfers title of the leased asset to the lessee at the end of the lease term.

Question

Quizplus · Accepted Answer

An operating lease is a type of lease that does not result in the transfer of ownership of the leased asset to the lessee. In other words, the company renting the asset doesn't have to record the asset being leased or the liability in their balance sheet, because the lease is considered a rental expense. Thus, an operating lease will not increase a company's assets or long-term liabilities.

Which Type of Lease Will NOT Increase a Company's Assets