CFA Practice Question

There are 520 practice questions for this study session.

CFA Practice Question

Which of the following statements characterizes an operating lease?
A. The lessor records depreciation expense and lease revenue.
B. The lessee records amortization expense and interest expense.
C. The lessor transfers title of the leased property to the lessee only for the duration of the lease term.
Explanation: For operating leases the lessee records rent expense and the lessor would record the related revenue and would amortize the asset.

User Contributed Comments 2

User Comment
danlan Since it is operational, asset belongs to lessor, and amortization happens to lessor.
CoffeeGirl operating lease
DR. Rent. Cr. Cash.
cause lessor still owns the equipment, so it's lessor who should amortize the depreciation expenses.
and credit the revenue which is received from the lessee.
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