An operating lease's primary characteristics are:
A) fully amortized, lessee maintain equipment and there is not cancellation clause.
B) not fully amortized, lessor maintains equipment and there is a cancellation clause.
C) fully amortized, lessor maintain equipment and there is a cancellation clause.
D) not fully amortized, lessor maintains equipment and there is not cancellation clause.
E) fully amortized, lessee maintain equipment and lessee can acquire assets at end of lease for fair market value.

Question

Quizplus · Accepted Answer

DOperating leases typically involve the lessor maintaining the equipment, and the lease is not fully amortized, meaning the total payments do not cover the full cost of the asset. This allows for lower lease payments. Some operating leases may include a cancellation clause (B), while others may not (D), depending on the specific terms of the lease agreement.

An Operating Lease's Primary Characteristics Are