The lessee has substantially all of the benefits and risks of ownership in a(n)
A) apartment lease.
B) capital lease.
C) operating lease.
D) operating lease and a capital lease.

Question

Quizplus · Accepted Answer

A capital lease transfers substantially all of the benefits and risks of ownership to the lessee, whereas an operating lease retains most of these benefits and risks with the lessor. An apartment lease is typically an operating lease, and the lessee generally does not have the benefits and risks of ownership. Therefore, the correct answer is B, capital lease. Option D is incorrect because the two types of leases have opposite characteristics in terms of benefits and risks of ownership.

The Lessee Has Substantially All of the Benefits and Risks