In a lease that is recorded as an operating lease by the lessee,the equal monthly rental payments should be
A) allocated between interest expense and depreciation expense.
B) allocated between a reduction in the liability for leased assets and interest expense.
C) recorded as a reduction in the liability for leased assets.
D) recorded as rental expense.

Question

Quizplus · Accepted Answer

In an operating lease, the lessee records the monthly rental payments as rental expense. There is no allocation between interest expense and depreciation expense, and the liability for leased assets is not recorded on the balance sheet as it is not considered a capital lease.

In a Lease That Is Recorded as an Operating Lease