When a lessee has a capital lease,the amount shown for the asset and the amount shown for the related liability are equal
A)only at the lease inception.
B)throughout the life of the lease.
C)only at the termination of the lease.
D)throughout the life of the lease,but only when there is an unguaranteed residual value.

Question

Quizplus · Accepted Answer

At the inception of a capital lease, the amount recognized for the leased asset and the related liability are equal, reflecting the present value of the lease payments. Over time, as payments are made and interest accrues, these amounts will diverge due to the amortization of the asset and the reduction of the liability.

When a Lessee Has a Capital Lease,the Amount Shown for the Asset