The lessee measures the cost of a leased asset, and the corresponding lease liability of a finance lease, as the:
A)present value of the periodic rental payments.
B)future value of the periodic rental payments.
C)sum of the annual cash payments to be made during term of the lease.
D)fair market value of the leased asset.

Question

Quizplus · Accepted Answer

The cost of a leased asset and the corresponding lease liability in a finance lease are measured as the present value of the periodic rental payments. This approach reflects the current value of the future lease payments that are obligated to be made over the lease term.

The Lessee Measures the Cost of a Leased Asset, and the Corresponding