An operating lease is usually short-term and is often cancelable at the option of the lessee. Option A is incorrect because a lease term equal to 75% or more of the estimated property is a criterion for a capital lease. Option C is incorrect because operating leases are not required to be shown on the balance sheet. Option D is incorrect because B is correct.

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An Operating Lease

Question 112

Multiple Choice

An operating lease

A) has a lease term equal to 75% or more of the estimated property.
B) is usually short-term and is often cancelable at the option of the lessee.
C) must show up on the balance sheet.
D) none of these.

Correct Answer: