Firms account for leases using either the operating lease method or the capital (finance) lease method.Which of the following is not true?
A)The operating lease method treats leases as executory contracts.
B)The operating lease method does not recognize a leased asset on the lessee's balance sheet.
C)The operating lease method does not recognize a lease liability on the lessor's balance sheet.
D)Under the operating lease method, the lessor recognizes rent revenue as the lessee uses the leased asset over time.
E)Under the operating lease method, the lessee does not recognize rent expense as the lessee uses the leased asset over time.

Question

Quizplus · Accepted Answer

Under the operating lease method, the lessee does recognize rent expense as the lessee uses the leased asset over time, contrary to what option E suggests.

Firms Account for Leases Using Either the Operating Lease Method