Which of the following correctly describes the accounting for leases?
A)A capital lease is not reported on the balance sheet as a liability.
B)A capital lease reports an asset on the balance sheet.
C)An operating lease reports an operating asset on the balance sheet.
D)An operating lease reports a liability on the balance sheet.

Question

Quizplus · Accepted Answer

A capital lease is reported on the balance sheet as both an asset (the leased item) and a liability (the obligation to make lease payments). An operating lease, on the other hand, is not reported as a liability on the balance sheet but rather as a rent expense in the income statement.

Which of the Following Correctly Describes the Accounting for Leases