Which one of the following statements with respect to leases is correct? A. A le

Question

Which one of the following statements with respect to leases is correct? A. A lease that does not transfer ownership from the lessor to the lessee by the end of the lease is automatically an operating lease. B. Sales and direct financing leases pertain more to lessees than lessors. C. An operating lease is treated like a rental contract between the lessor and lessee. D. Unpredictability of lease revenues or expenses can transform what would otherwise be a capital lease for the lessee into an operating lease for the lessee. Which one of the following statements with respect to leases is correct? A. A lease that does not transfer ownership from the lessor to the lessee by the end of the lease is automatically an operating lease. B. Sales and direct financing leases pertain more to lessees than lessors. C. An operating lease is treated like a rental contract between the lessor and lessee. D. Unpredictability of lease revenues or expenses can transform what would otherwise be a capital lease for the lessee into an operating lease for the lessee.

Explanation / Answer

A lease that does not transfer ownership from the lessor to the lessee by the end of the lease is automatically an operating lease.

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