13 on January 1, 2014, custom shirts Inc. entered into a lease agreement appropriately classified as an operating lease. The lease term is 3 years. The annual payments escalate, and are (a)dollar 11.000 for year 1, (b) dollar 12,000 for year 2, and (c) dollar 13,000 for year 3. How much rent expense will custom shirts recognize for 2014? When a capital lease is first recorded at the inception of the lease, the lessee typically debits: Lease liability. Rent expense. Leased asset. Lease receivable. To classify a lease, for the lessee, as a capital lease, the lease term has to be non-cancellable, and the lease must meet one of four criteria. What are the four criteria? From the lessor's standpoint, what distinguishes a sales-type lease from a direct financing lease? Minimum lease payments include the periodic payments made by the lessee to the lessee, but will not include other incidental payments such as the bargain purchase amount or any guaranteed residual value. True False The capital lease liability of a lessee will always equal the net book value (original cost less accumulated depreciation) of the leased asset recorded by the lessee during the life of the lease. True False