Which one of the following characteristics does not distinguish financial leases from operating leases?
A)financial lease analysis compares leasing to borrowing.
B)financial leases are not cancelable.
C)operating leases involve real physical assets.
D)operating leases do not extend over the economic life of the asset.

Question

Quizplus · Accepted Answer

Operating leases indeed involve real physical assets, but this characteristic does not distinguish them from financial leases, as financial leases also involve real physical assets. The distinction between the two types of leases lies in the terms and conditions, such as the lease's duration, cancelability, and how they are accounted for in financial statements, rather than the nature of the assets leased.

Which One of the Following Characteristics Does Not Distinguish Financial