Sumner leases equipment to Butler Corporation. Butler records the first payment as prepaid rent. This implies that the lease ________.

Name: Sumner leases equipment to Butler Corporation. Butler records the first payment as prepaid rent. This implies that the lease ________.
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Question

Quizplus · Accepted Answer

When Butler records the first payment as prepaid rent, it indicates that the lease is an operating lease, as operating leases are treated as rental agreements where payments are recorded as rent expenses or prepaid rent.

Sumner Leases Equipment to Butler Corporation