Leases of short-term assets are operating leases,and leases of long-term assets are capital leases.

Question

Quizplus · Accepted Answer

This statement is incorrect. The classification of a lease as an operating or capital lease depends on various factors such as the lease term, the present value of lease payments, and whether the lease transfers ownership of the asset to the lessee at the end of the lease term. The term of the lease does not determine its classification as an operating or capital lease.

Leases of Short-Term Assets Are Operating Leases,and Leases of Long-Term