Which of the following leases is essentially the purchase of an asset with debt financing?

Question

Quizplus · Accepted Answer

A capital lease is essentially the purchase of an asset with debt financing. In a capital lease, the lessee treats the asset as if it were purchased with borrowed funds and owns it for accounting purposes. On the other hand, an operating lease is considered a rental of the asset, and the lessor bears the risks and benefits of ownership.

Which of the Following Leases Is Essentially the Purchase of an Asset