Question

From the lessee's perspective, in the earlier years of a lease, the use of the:

a. capital method will enable the lessee to report higher income, compared to the operating method.

b. capital method will cause debt to increase, compared to the operating method.

c. operating method will cause income to decrease, compared to the capital method.

d. operating method will cause debt to increase, compared to the capital method.

Answer 1

b

Step-by-step explanation:

From the lessee's perspective, in the earlier years of a lease, the use of the:

capital method will cause debt to increase, compared to the operating method.Therefore option b is correct. As in early years of lease operating method is far more beneficial then the capital method.