Refer to the following lease amortization schedule. The 10 payments are made annually starting with the beginning of the lease. Title does not transfer to the lessee and there is no purchase option or guaranteed residual value. The asset has an expected economic life of 12 years. The lease is noncancelable.

-A sales-type lease is reported in the lessor's balance sheet as:

Question

Refer to the following lease amortization schedule. The 10 payments are made annually starting with the beginning of the lease. Title does not transfer to the lessee and there is no purchase option or guaranteed residual value. The asset has an expected economic life of 12 years. The lease is noncancelable.
 
-A sales-type lease is reported in the lessor's balance sheet as:

Quizplus · Accepted Answer

A sales-type lease is classified as a type of financing arrangement and is reported on the lessor's balance sheet as an asset. This is because the lessor has effectively sold the leased asset to the lessee in exchange for regular lease payments. The leased asset is recognized as an asset on the balance sheet and is also depreciated over time. The revenue from the lease is recognized over the lease term as interest income.

Refer to the Following Lease Amortization Schedule