A machine is leased and the Present value of the minimum lease payments amounts to the fair value of the leased asset. How would this be shownin the lessee's books?OA. In the Balance Sheet as a fixed asset onlyOB. In the balance sheet as affixed asset and no entries shown in the Profit and Loss AccountOC. In the Balance sheet as a fixed asset, liability to the lessor and finance charge in the Income StatementOD. Lease payments shown in the Profit/Loss account

A. In the Balance Sheet as a fixed asset only:This option doesn't account for the liability to the…

A machine is leased and the Present value of the minimum lease payments amounts to the fair value of the leased assel. How would this be shown in the lessee's books? OA. In the Balance Sheet as a fixed asset only B. In the balance sheet as affixed asset and no entries shown in the Profit and Loss Account OC. In the Balance sheet as a fixed asset, liability to the lessor and finance charge in the Income Statement OD. Lease payments shown in the Profit/loss account

A machine is leased and the Present value of the minimum lease payments amounts to the fair value of the leased assel. How would this be shown in the lessee's books? OA. In the Balance Sheet as a fixed asset only B. In the balance sheet as affixed asset and no entries shown in the Profit and Loss Account OC. In the Balance sheet as a fixed asset, liability to the lessor and finance charge in the Income Statement OD. Lease payments shown in the Profit/loss account

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Concept explainers

Leasing

Leasing is a contractual arrangement in which someone (a lessee) pays the owner (or lessor) of a building, land, vehicle, or other asset for the use of that asset. The lease is the agreement between lessee and lessor.

Question

A machine is leased and the Present value of the minimum lease payments amounts to the fair value of the leased asset. How would this be shown
in the lessee's books?
OA. In the Balance Sheet as a fixed asset only
OB. In the balance sheet as affixed asset and no entries shown in the Profit and Loss Account
OC. In the Balance sheet as a fixed asset, liability to the lessor and finance charge in the Income Statement
OD. Lease payments shown in the Profit/Loss account

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