In a(n)_____ lease the lessee will record the lease by debiting an asset account and crediting Lease Payable.

Question

Quizplus · Accepted Answer

Capital leases are recorded on the balance sheet as an asset (leased asset) and a liability (lease payable), whereas operating leases are recorded only as rent expense on the income statement. Short-term leases are leases with terms of 12 months or less, and long-term leases are leases with terms greater than 12 months. However, the lease accounting treatment depends on whether it is an operating lease or capital lease, not on the length of the lease term. Therefore, the best choice for this question is B, capital lease.

In A(n)_____ Lease the Lessee Will Record the Lease by Debiting