- CFA Exams
- CFA Level I Exam
- Topic 3. Financial Statement Analysis
- Learning Module 25. Non-Current (Long-term) Liabilities
- Subject 7. Lease Classification
CFA Practice Question
What is a conventional rental agreement that transfers ownership rights to the lessee at the end of the rental term?
B. Operating lease
C. Direct financing lease
D. Sales-type lease
A. Capital lease
B. Operating lease
C. Direct financing lease
D. Sales-type lease
Correct Answer: A
An operating lease is a conventional rental agreement that does not transfer ownership rights to the lessee at the end of the rental term.
User Contributed Comments 3
| User | Comment |
|---|---|
| waynenfire | Isn't a sales-type lease the same thing though from the lessors prespective, in that, it also transfers ownership rights to the lessee? |
| Capital | But it is not a "conventional rental agreement" as specified by this question. |
| jpowers | Direct financing lease and sale-type lease are types of capital leases from the lessor's point of view, |