Given its importance,how does the accounting profession determine whether a lease is an operating lease or a purchase capital lease?
A)by observing what ledger account the transaction was recorded in
B)by determining the intentions of the lessee
C)based on whether the item being leased is a capital asset or not
D)based on whether title is likely to pass at the end of the lease period
E)by asking whether the asset is to be used short-term or long-term

Question

Quizplus · Accepted Answer

The classification of a lease as an operating lease or a capital lease (finance lease under newer standards) often depends on specific criteria, one of which includes whether the ownership of the asset is expected to transfer to the lessee at the end of the lease term.

Given Its Importance,how Does the Accounting Profession Determine Whether a Lease