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 since the lessee acquires significant benefits and risks of ownership, and the lease payments are structured to cover the cost of the asset plus interest over the lease term. An operating lease, on the other hand, is similar to renting an asset and does not result in the acquisition of ownership. Therefore, option B is the correct answer.

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