If the lessee treats the lease as an operating lease, then the lessor:
A)records a liability.
B)records a sale.
C)treats the lease as a finance lease.
D)retains the asset on its books.

Question

Quizplus · Accepted Answer

If the lessee treats the lease as an operating lease, the lessor retains the asset on its books and does not record a sale or liability. In an operating lease, the lessor maintains ownership and is responsible for the maintenance and any expenses associated with the asset. Therefore, the lessor would not treat the lease as a finance lease and would not record a liability.

If the Lessee Treats the Lease as an Operating Lease