Under governmental accounting principles for capital and operating leases; expenditures are recorded each period for the amount of the annual lease payment for all leases,but the expenditures are classified differently for capital and operating leases.

Question

Quizplus · Accepted Answer

Under governmental accounting principles, expenditures for capital leases are treated similarly to assets and liabilities, with a portion of the expenditure being allocated as interest expense and the remainder being recorded as a reduction to the lease liability. Operating leases, on the other hand, are treated as rent expense and are recorded as line items in the operating budget.

Under Governmental Accounting Principles for Capital and Operating Leases; Expenditures