In a[n] _______,the transaction is treated as a conventional operating lease for accounting purposes and payments under the lease are treated as rent; but for tax purposes the lessee treats the transaction as though it had purchased the property and obtained a loan from the seller.

Question

Quizplus · Accepted Answer

In a synthetic lease, for accounting purposes, the transaction is considered an operating lease and the lessee treats the payments as rent. However, for tax purposes, the lessee treats the transaction as a purchase, with a loan from the seller. Therefore, option A is the correct choice. Option B, Sale and leaseback, involves the sale of an asset by the company to another party and leasing the same asset back. Options C and D, operating lease and non-operating lease respectively, do not match the given scenario.

In A[n] _______,The Transaction Is Treated as a Conventional Operating