Who is the lessee?

Who is the lessee?

• A. The entity that grants the right to use the asset
• B. The entity that funds the purchase of the asset
• C. The entity that obtains the use of the right of use asset
• D. The asset owner

Answer: (C)

The lessee is the party that uses the asset under the lease for a period in exchange for payments, obtaining the right to use the asset without owning it. That makes the entity that obtains the use of the right-of-use asset the lessee. The one who grants the right to use the asset is the owner or lessor, not the lessee. The entity that funds the purchase isn’t defined by who uses the asset, and the asset owner is the lessor. In practice, the lessee records a right-of-use asset and a lease liability for the terms of the agreement.

The lessee is the party that uses the asset under the lease for a period in exchange for payments, obtaining the right to use the asset without owning it. That makes the entity that obtains the use of the right-of-use asset the lessee. The one who grants the right to use the asset is the owner or lessor, not the lessee. The entity that funds the purchase isn’t defined by who uses the asset, and the asset owner is the lessor. In practice, the lessee records a right-of-use asset and a lease liability for the terms of the agreement.