Asked by
Verified
Under an operating lease, both the leased asset and the related lease obligation are shown on the statement of financial position.
Operating Lease
A contract that allows for the use of an asset but does not convey rights of ownership of the asset, with payments made over a shorter period than the asset's useful life.
Lease Obligation
A financial commitment that represents the future payments an entity is obligated to make under lease agreements.
Statement of Financial Position
A financial report detailing an entity's assets, liabilities, and shareholders' equity at a specific point in time, offering a snapshot of its financial status.
- Distinguish between operating and capital leases and their impact on financial statements.
Verified Answer
Learning Objectives
- Distinguish between operating and capital leases and their impact on financial statements.
Related questions
When Accounting for an Operating Lease,a Liability Is Recognized When ...
When a Lessee Makes Periodic Cash Payments for an Operating ...
On January 1, 2010, Becky Company Signed a Lease Agreement ...
An Operating Lease Should Be Recorded in the Lessee's Accounts ...
When a Lessee Makes Periodic Cash Payments for a Capital ...