An operating lease must be disclosed on the firm's balance sheet, according to generally accepted accounting principles.

Question

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Under generally accepted accounting principles (GAAP), operating leases are recorded on the balance sheet as both a right-of-use asset and a corresponding lease liability, but traditionally, before the adoption of the new lease accounting standards (ASC 842), operating leases were not required to be recognized on the balance sheet; they were disclosed in the footnotes.

An Operating Lease Must Be Disclosed on the Firm's Balance