Lessors classify and account for all leases that do not quqlify as direct-financing or sales-type leases as operating leases.

Question

Quizplus · Accepted Answer

This statement is true. Operating leases are leases where the lessor does not transfer ownership or a bargain purchase option to the lessee, and are accounted for as rental agreements where the lessor earns income over the lease term. Direct-financing and sales-type leases, on the other hand, are accounted for as financing arrangements where the lessor earns income from both the interest on receivables and the sale of goods or property.

Lessors Classify and Account for All Leases That Do Not