Which of the following is a difference between acquiring an asset with a capital lease or using debt to purchase the asset?
A) The lease does not appear as a liability on the balance sheet.
B) The lessee can depreciate the asset over the length of the lease rather than over its useful life.
C) The lessee does not retain the salvage value of the asset.
D) The lessee is not responsible for repairs, maintenance and insurance on the asset.

Question

Quizplus · Accepted Answer

When acquiring an asset with a capital lease, the lessee does not retain the salvage value of the asset, which is a key difference from purchasing the asset with debt. In the case of purchasing with debt, the borrower (or purchaser) typically retains ownership and thus any salvage value at the end of the asset's useful life.

Which of the Following Is a Difference Between Acquiring an Asset