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What type(s) of leases result in an asset and a liability on the balance sheet? Select one: A. Operating Leases * B. Finance Leases C. Both Operating and Finance Leases D. Neither Operating and Finance Leases

What type(s) of leases result in an asset and a liability on the balance sheet? Select one: A. Operating Leases * B. Finance Leases C. Both Operating and Finance Leases D. Neither Operating and Finance Leases

FINANCIAL ACCOUNTING
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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**Question:** What type(s) of leases result in an asset and a liability on the balance sheet? **Select one:** - A. Operating Leases ❌ - B. Finance Leases - C. Both Operating and Finance Leases - D. Neither Operating and Finance Leases **Explanation:** This multiple-choice question asks which types of leases result in both an asset and a liability being recorded on a company's balance sheet. The incorrect answer "A. Operating Leases" is highlighted, indicating that operating leases alone do not create both an asset and a liability under typical accounting standards. **Note:** Typically, finance leases are recorded this way, whereas operating leases may not have been, though accounting standards like IFRS 16 and ASC 842 have updated how operating leases are recognized.
Transcribed Image Text:**Question:** What type(s) of leases result in an asset and a liability on the balance sheet? **Select one:** - A. Operating Leases ❌ - B. Finance Leases - C. Both Operating and Finance Leases - D. Neither Operating and Finance Leases **Explanation:** This multiple-choice question asks which types of leases result in both an asset and a liability being recorded on a company's balance sheet. The incorrect answer "A. Operating Leases" is highlighted, indicating that operating leases alone do not create both an asset and a liability under typical accounting standards. **Note:** Typically, finance leases are recorded this way, whereas operating leases may not have been, though accounting standards like IFRS 16 and ASC 842 have updated how operating leases are recognized.
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