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Why would a lessee rather have an operating lease than a capital lease? A) operating leases...

Why would a lessee rather have an operating lease than a capital lease? A) operating leases do not require reporting long-term liabilities. B) capital leases would require larger lease payments C) operating leases permit a tax deduction for depreciation D) noncancelable operating leases involve less risk

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Answer #1

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A) operating leases do not require reporting long-term liabilities.

Explanation : As per existing standard under US GAAP, operating lease is required to be reported in the balance sheet. .

**However FSAB has announced a new standard for lease accounting under which operating lease will also be recorded in balance sheet. Th new standard will be effective at beginning of fiscal year after December 15 , 2018 for public company &  December 15 , 2019 for private company.

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