Lessee and lessor entered into a lease. The lease is classified as an operating lease by both the lessee and lessor. The lease term is shorter than the useful life of the asset. How will the leased asset be accounted for?

The lessee will record amortization expense associated with the right-of-use asset over the asset's useful life.

The lessor will retain the asset on its books and record depreciation expense over the asset's useful life.

The lessor will retain the asset on its books and record amortization expense over the asset's useful life.

The lessee will depreciate the asset over the lease term.