Question

Which of the following is NOT a characteristic of an operating lease? Select one:

A. The lease is cancellable on short notice
B. The lease is similar to rental expense.
C. lease is usually of short duration
D. The total lease payments are insufficient to fully recover the cost
E. The lease is responsible for insurance, taxes, and upkeep

Answer 1

The characteristic not associated with an operating lease is the lessee's responsibility for insurance, taxes, and upkeep, as these are typically the lessor's obligations.

Step-by-step explanation:

The characteristic that is NOT a feature of an operating lease is E. The lease is responsible for insurance, taxes, and upkeep. Typically, in an operating lease, these responsibilities fall on the lessor, not the lessee. Operating leases are generally short-term, cancellable contracts that are more akin to rental agreements where the lessee pays for the use of an asset but does not assume the risks and benefits of ownership.

Other features of an operating lease include it being cancellable on short notice, similar to a rental expense, usually of short duration, and the total lease payments being insufficient to recover the full cost of the asset for the lessor.