Final answer:
The correct methods of accounting for a lease by the lessee are the operating lease method and the capital lease method. The operating lease records lease payments as an expense, whereas the capital lease treats the lease as if the lessee has purchased the asset, recording both an asset and a liability.
Step-by-step explanation:
The methods of accounting for a lease by the lessee are operating and capital lease methods. These are two distinct approaches for recognizing leases in the lessee's financial statements according to accounting standards.
Operating Lease Method
In an operating lease, the lessee records lease payments as an expense over the lease term, reflective of the rental cost. This method does not result in the recognition of lease assets or lease liabilities on the balance sheet, except for leases with a term of more than one year which must be recognized under the new accounting standards.
Capital Lease Method
A capital lease, also known as a finance lease, is accounted for as if the lessee has purchased the asset. It results in recording an asset and a liability at the present value of the lease payments. Over time, the lessee will recognize depreciation expense for the asset and interest expenses on the liability, thus impacting both the income statement and balance sheet.
The options such as 'sales lease' or 'leveraged lease' are not common categorizations under the lessee's accounting methods. Instead, 'sales lease' refers more properly to a type of transaction from the perspective of the lessor, and 'leveraged lease' is an arrangement that involves a third-party financier.