All of the following are correct regarding operating leases except:
A) Cash outflow is in the form of rent payments
B) The rights to use the property for a specified period of time are conferred to the lessee by the lessor.
C) At the end of the lease the lessee returns the property to the lessor
D) Depreciation expense can be recorded on the books by the lessee

Question

Quizplus · Accepted Answer

Depreciation expense cannot be recorded on the books by the lessee for operating leases. This is because the lessee does not own the property and does not have the option to purchase it at the end of the lease. Depreciation is only recorded for capital leases.

All of the Following Are Correct Regarding Operating Leases Except