Which of the following statements is not true of a financial lease?
A)it can be cancelled after the equipment is no longer needed.
B)it is a source of financing.
C)it is binding obligation for the lessee.
D)it extends over most of the economic life of the leased asset.

Question

Quizplus · Accepted Answer

A financial lease is a binding obligation for the lessee and is typically for most of the economic life of the leased asset. It is a source of financing, but it cannot be cancelled after the equipment is no longer needed. This is one of the key differences between a financial lease and an operating lease, where the latter can be cancelled before the end of the lease term.

Which of the Following Statements Is Not True of a Financial