All of the following statements regarding leases are true except:
A) For a capital lease the lessee records the leased item as its own asset.
B) For an operating lease the lessee reports the lease payments as rental expense.
C) For a capital lease the lessee depreciates the asset acquired under the lease, but for an operating lease the lessee does not.
D) Capital leases create a long-term liability on the balance sheet, but operating leases do not.
E) Capital leases do not transfer ownership of the asset under the lease, but operating leases often do.

Question

Quizplus · Accepted Answer

Capital leases can transfer ownership of the asset to the lessee, while operating leases do not transfer ownership. Therefore, the statement "Capital leases do not transfer ownership of the asset under the lease, but operating leases often do" is false.

All of the Following Statements Regarding Leases Are True Except