If the title to a leased asset transfers to the lessee at the end of the lease term,what is the period and residual value used by the lessor to depreciate the leased asset?

Question

Quizplus · Accepted Answer

If the title to a leased asset transfers to the lessee at the end of the lease term, it is considered a finance lease. In such cases, the residual value and lease period are not relevant to the lessor for depreciation purposes, as the leased asset will no longer be in their books after lease termination. Therefore, Choice 3 is the correct option.

If the Title to a Leased Asset Transfers to the Lessee