From the perspective of the lessor, two possible lease classifications are: a. Financing or sales-type. b. Operating or financing. c. Sales-type or indirect financing. d. Operating or sales-type

Answer: b. Operating or financing.

Explanation: A lease is defined as contract granting use or occupation of property during a specified period in exchange for a specified rent. From the perspective of the lessor (The owner of property that is leased), there are two possible lease classifications which are the operating and financing leases.

The key difference between them is that in a financing lease contract, ownership of the property is transferred to the lessee (The entity to whom a lease is given) at the end of the lease term. In other words, the lessor acquires the asset for the lessee and rents it to them for an agreed period. However, an operating lease agreement allows for the use of an asset but does not confer ownership rights of the asset management to the lessee. That is, the ownership of the asset is retained for the entirety of the lease period by the lessor.

From the perspective of the lessor, two possible lease classifications are b. Operating or financing

Explanation:

A lease is a right of use of an asset granted by a lessor to a lessee.

Only two types of Lease exists:

Type 1 Finance Lease - This type of lease Classification is made to show that the lessee has been granted the asset for the large part of asset useful life and or the lessee will purchase the asset after use.

Type 2 Operating Lease - This type of Lease Classification is made to short term leases made by a lessor to a lessee usually less than 12 months, Low value items and also right of use granted were the asset is not expected to be transferred to the lessee after the lease termination period.