Which of the following statements about a capital lease is false?

Question

A. The lessor capitalizes the net investment in the lease.

B. The lessor records the leased item as an asset.

C. The lessee records depreciation or capital cost allowance on the leased asset.

D. The lease arrangement represents a form of financing.

MOHAMMED KHATER · Answer

B. The lessor records the leased item as an asset.

essor records the leased item

Nadeem Aslam · Answer

Option C is correct.

Lessor will not record Depreciation or capital cost allowance on leased assets. Lease can do this in case of finance lease.