Question

Crystal Corporation makes $2,800 payments every month for leasing office equipment. Crystal recorded a lease payment as follows:Lease payable 1,680 Interest expense 1,120 Cash 2,800Amortization expense 1,680 Right-of-use asset 1,680Crystal must have a(n):__________a) Leveraged lease.b) Sales-type lease without selling profit.c) Finance lease.d) Operating lease.

Answer 1

Answer: operating lease

Step-by-step explanation:

Operating lease is a contract whereby a owner who is regarded as the lessor, allows a user, who is regarded to as the lesse, to use an asset for a stipulated period of time without transfering ownership rights.

With regards to the above scenario, Crystal must have an operating lease.