No A contract contains a lease if: there is a no clearly identified asset; the lessee has the right to obtain substantially all the economic benefits derived from used of the asset throughout the lease term; and the lessee can direct how and for what purpose the asset will be used. True or False Answer is: 3 Failure to appropriately capitalize leased assets and liabilities results in a number of distortions in the ROE disaggregation analysis. Which of the following is not a distortion? A) Net operating asset turnover is overstated due to the non-reporting of lease assets. Reported total expense is lower in the early years of a capital lease relative to an operating B) lease, but is higher in later years. C) Financial leverage is understated. D) Total assets are understated. E) All of the above are distortions. Answer is