Question
Each period of a finance lease, the lessee records a lease expense that includes which of the following? Interest expense on the lease liability, using
Each period of a finance lease, the lessee records a lease expense that includes which of the following?
| Interest expense on the lease liability, using the effective interest rate method and the discount rate it used to compute the present value of the liability at the lease commencement date; variable lease payments not included in the lease liability in the period in which the obligation for the variable payments is incurred. | ||
| Interest expense on the lease liability, using the effective interest rate method and the discount rate it used to compute the present value of the liability at the lease commencement date; variable lease payments not included in the lease liability in the period in which the obligation for the variable payments is incurred; and changes in variable lease payments that depend on an index or rate. | ||
| Neither A nor B is correct. | ||
| Both A and B are correct. |
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