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1. The lessee has not taken on the risks and rewards incidental to ownership2. The leased item is not shown as an asset in the lessee's financial statements3. The lease payments are recognized as an expense in the lessee's financial statements4. The leased item is not shown as an asset in the lessor's financial statements
The4th satetment is wrong. Leased item must be shown as an asset in Lessor's Financial statment. Because, there is no transfer of ownership in Operating Lease, only the possession of the asset is changed.
1. The lessee has not taken on the risks and rewards incidental to ownership
#4 is incorrect.
The asset remains with the Lessor.
#4 The leased item is not shown as an asset in the lessor's financial statements
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