标题: Expense vs. Payment - example, finance lease [打印本页] 作者: RobertA 时间: 2013-4-12 21:43 标题: Expense vs. Payment - example, finance lease
In one of my study guides, there is the following description of a finance lease “t. Finance
lease expense consists of depreciation of the asset and interest on the loan. the finance
lease payment consists of an operating outflow of cash (interest expense) and a financing
outflow of cash (principal reduction)”
I know that finance leases have been covered many times and I fully know that, in a finance lease, the yearly expense is the depreciation and interest on the loan. The thing is that I have not previously heard of the terms ‘expense’ and ‘payment’ being used as two completely different things. For the exam, will the use of either word warrant a different answer? Perhaps I’m misunderstanding something about finance leases… any help would be appreciated.
