Leasing is often referred to as off-balance sheet financing because lease payments are shown as operating expenses on a firm's income statement and,under certain conditions,leased assets and associated liabilities do not appear on the firm's balance sheet.

Question

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Lease payments are treated as operating expenses and do not affect the firm's balance sheet under certain conditions, making leasing an off-balance sheet financing method.

Leasing Is Often Referred to as Off-Balance Sheet Financing Because