Firms report payments for capital leases in the cash flow statement:

Question

Quizplus · Accepted Answer

Payments for capital leases are recorded in the cash flow statement partly as operating cash flows, as they represent expenses related to the company's operations, and partly as financing cash flows, as the lease payments represent the repayment of principal and interest on the lease liability. Therefore, the correct option is D: partly as operating cash flows and partly as financing cash flows.

Firms Report Payments for Capital Leases in the Cash Flow