From the perspective of the lessee,leases may be classified as either:
A)Direct financing or sales-type.
B)Capital or direct financing.
C)Capital or operating.
D)Direct financing or operating.

Question

Quizplus · Accepted Answer

From the perspective of the lessee, leases may be classified as either capital or operating leases. Capital leases are recorded on the lessee's balance sheet as a liability and an asset, while operating leases are not recorded on the balance sheet but rather expensed through the income statement. Direct financing and sales-type leases are classifications from the perspective of the lessor, not the lessee.

From the Perspective of the Lessee,leases May Be Classified as Either