A lessee records interest expense in both a capital lease and an operating lease.

Name: A lessee records interest expense in both a capital lease and an operating lease.
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Question

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In a capital lease (finance lease under newer standards), a lessee records interest expense on the lease liability. However, in an operating lease, the lessee typically records a single lease expense on a straight-line basis over the lease term, without separating the expense into interest and depreciation components.

A Lessee Records Interest Expense in Both a Capital Lease