Presentation of the lease on the lessor's cash flow statement is dependent upon the classification of the lease.

Question

Quizplus · Accepted Answer

The classification of the lease (operating lease or finance lease) will determine how the lease payments are presented on the lessor's cash flow statement. For an operating lease, the lease payments are classified as operating cash inflows, whereas for a finance lease, the lease payments are split into principal and interest components and presented as financing cash inflows.

Presentation of the Lease on the Lessor's Cash Flow Statement