Prepayments made on an operating lease are considered to be:
A)A lease expense.
B)A depreciable asset.
C)Executory costs.
D)A prepayment of rent.

Question

Quizplus · Accepted Answer

Prepayments made on an operating lease are considered a prepayment of rent, as they are payments made in advance for the right to use the leased asset for a specific period of time. They are not considered a lease expense, as they do not represent the actual cost of using the asset during that period. They are also not considered a depreciable asset, as the lessee does not have ownership or control over the asset. Finally, they are not considered executory costs, as these are costs incurred by both parties in fulfilling their obligations under the lease agreement.

Prepayments Made on an Operating Lease Are Considered to Be