Which type of lease will NOT increase a company's assets or long-term liabilities?
A)A lease in which title is transferred to the lessee at the end of the lease term
B)The present value of lease payments is 90% or more of the present value of the leased asset
C)A capital lease
D)An operating lease

Question

Quizplus · Accepted Answer

An operating lease does not transfer ownership of the asset and is treated as a rental expense on the lessee's income statement, therefore it does not increase a company's assets or long-term liabilities.

Which Type of Lease Will NOT Increase a Company's Assets