Under ASC 842, equal monthly rental payments for a particular lease should be charged to rental expense by the lessee for which of the following?
Finance lease Short-term lease

Question

Under ASC 842, equal monthly rental payments for a particular lease should be charged to rental expense by the lessee for which of the following? Finance lease Short-term lease

Quizplus · Accepted Answer

Under ASC 842, for a finance lease, the lessee recognizes interest on the lease liability and amortization of the right-of-use asset, which generally results in a front-loaded expense pattern rather than equal monthly rental expenses. For short-term leases (defined as leases with a term of 12 months or less), lessees may elect not to recognize lease assets and liabilities, and instead, recognize lease payments as expense on a straight-line basis over the lease term, which would result in equal monthly rental expenses.

Under ASC 842, Equal Monthly Rental Payments for a Particular