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Basic Question 3 of 3

Management's intentional structuring of a lease transaction as an off-balance-sheet item (operating lease) illustrates how GAAP requirements may result in the quality of financial reporting being distorted. True or False?

User Contributed Comments 4

User Comment
kalps FALSE, as GAAP requires disclosure of commitments under CL for the future five years
db28luke GAAP does require disclosure, but it is usually buried near the end of the footnotes. Most people don't get that far.
poomie83 Umm the question is refering to op lease - therefore true
ascruggs92 kapls: CL's are not off balance sheet
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I passed! I did not get a chance to tell you before the exam - but your site was excellent. I will definitely take it next year for Level II.
Tamara Schultz

Tamara Schultz

Learning Outcome Statements

explain the financial reporting of leases from the perspectives of lessors and lessees

CFA® 2025 Level I Curriculum, Volume 2, Module 8.