The difference between the expense charged with a capital lease and an operating lease is
A)the amount of total expense,with a capital lease higher than an operating lease.
B)the amount of total expense,with an operating lease higher than a capital lease.
C)the number of years that recognize expense.
D)the timing of the expense recognition.

Question

Quizplus · Accepted Answer

The difference between the expense charged with a capital lease and an operating lease is the timing of the expense recognition. With a capital lease, the expense is recognized over the life of the lease, while with an operating lease, the expense is recognized as the lease payments are made. Therefore, the total amount of expense may be the same, but the timing of when it is recognized is different.

The Difference Between the Expense Charged with a Capital Lease