Which of the following statements regarding leases is false?

Question

Quizplus · Accepted Answer

This statement is incorrect because it is the lessee, not the lessor, who records a lease liability on its balance sheet when a lease is classified as a long-term lease (also known as a finance lease under the new accounting standards). The lessee recognizes a right-of-use asset and a corresponding lease liability for most long-term leases. On the other hand, the lessor would record a lease receivable and an asset representing its right to receive lease payments.
To clarify the other options:
a. Lease agreements are indeed a popular form of financing the purchase of assets because they often do not require a large initial outlay of cash compared to purchasing the asset outright.
b. Accounting standards, such as the International Financial Reporting Standards (IFRS) and the Generally Accepted Accounting Principles (GAAP), recognize two types of leases: finance leases (long-term) and operating leases (short-term).
d. If a lease is classified as a short-term lease, the lessee typically does not record an asset on its balance sheet. Instead, lease payments are recognized as an expense on a straight-line basis over the lease term, unless another systematic basis is more representative of the time pattern of the user's benefit.

Which of the Following Statements Regarding Leases Is False