Long-term, noncancelable leases whereby the owner receives payments that cover the cost of the equipment plus a return on investment in the equipment are known as capital leases.

Question

Quizplus · Accepted Answer

This statement is true. Capital leases are long-term leases where the lessee is treated as the owner of the asset for accounting purposes, and payments made by the lessee cover the cost of the equipment plus a return on the lessor's investment in the equipment.

Long-Term, Noncancelable Leases Whereby the Owner Receives Payments That Cover