Question

Which of the following statements about the lessee’s financial (accounting) statements is most correct?

A	Under current guidelines, all leases are reported on the balance sheet.

B	Under current guidelines, no leases are reported on the balance sheet.

C	Under current guidelines, some leases are reported on the balance sheet.

D	Under proposed future guidelines, no leases are reported on the balance sheet.

E	Under proposed future guidelines, some leases are reported on the balance sheet.

Answer 1

Lease is defined as a contract between two parties for use of assets of one parties by paying rent for using assets. the owner of assets is calls Lessor and the person who use assets is called Lessee.

Theer is two type lease contract, Operating lease and financial lease. in operating lease, periodic lease payment is reported in income statement as expense and in financig lease, assets are reported in balance sheet.

So, Under current Guidance, somer leases are reported in balance sheet and some lease are reported in Income statement.

Option (C) is correct answe.