If a company leases an asset instead of buying it,should it show the asset on the Statement of Financial Position?
A) No. The lease payments are shown as an expense on the Income Statement.
B) Yes, but only if it was sold and then leased back.
C) Yes, if the company is using the asset as if it was its own
D) No. The asset remains the property of the lessor

Question

Quizplus · Accepted Answer

FRS 17 defines "operating lease" and "finance lease". Under a "finance lease", the company must treat the asset as if it owns it. A "finance lease" is one where "substantially all risks and rewards are transferred to the operator" for example if you lease the asset for the majority of its useful life.

If a Company Leases an Asset Instead of Buying It,should