Which of the following regarding financing leases and operating leases under lessors and lessees is not true?
A)The lessor model requires that most leases be recognized as financing leases
B)The lessor model requires a relatively long-term leases-usually those more than one year in duration- would be recorded as an operating lease.
C)The lessee model uses a "right to use" concept deal with financing leases
D)The lessee model records operating lease payments as an expense when paid.

Question

Quizplus · Accepted Answer

This statement is not entirely true. The lessor model does require that most leases be recognized as financing leases, but it also allows for operating leases to be recognized under certain conditions, such as when the lease term is relatively short (less than a year). The lessee model does use a "right to use" concept to deal with financing leases, and also records operating lease payments as an expense when paid.

Which of the Following Regarding Financing Leases and Operating Leases