Compared to using a fi nance lease, a lessee that makes use of an operating lease will mostlikely report higher:A . debt.B . rent expense.C . cash fl ow from operating activity.
Compared to using a fi nance lease, a lessee that makes use of an operating lease will mostlikely report higher:A . debt.B . rent expense.C . cash fl ow from operating activity.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
Compared to using a fi nance lease, a lessee that makes use of an operating lease will most
likely report higher:
A . debt.
B . rent expense.
C . cash fl ow from operating activity.
Expert Solution
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Step 1
Lease: Lease is a contractual agreement whereby the right to use an asset for a particular period of time provided by the owner of the asset to the user of the asset. The owner, who possesses the asset, is termed as “lessor” and the user, to whom the right is transferred to, is termed as “lessee”.
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