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Learning Objective $15-08$ Describe the impact of leases on the statement of cash flows and disclosure requirements pertaining to leases.

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We report all cash flows as operating cash flows, except the principal portion of each payment in a finance lease, which is a cash flow from financing activities. Extensive disclosure requirements for lessees and lessors are designed to enable users of financial statements to assess the amount, timing, and uncertainty of cash flows arising from leases.

Impact of Leases on Statement of Cash Flows

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Knowledge Check $01$

Which of the following statements about the impact of leases on the statement of cash flows are true?

Note: Select all that apply.

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The lessee reports cash payments for operating leases as cash flows from operating activities.

The lessee reports cash payments for operating leases as cash flows from operating activities.

The lessor reports cash payments for operating leases as cash flows from operating activities.

The lessor reports cash payments for operating leases as cash flows from operating activities.

The lessee reports cash payments for finance leases as cash flows from financing activities.

The lessee reports cash payments for finance leases as cash flows from financing activities.

The lessor reports cash receipts from a sales$-$type lease as cash inflows from operating activities.

The lessor reports cash receipts from a sales$-$type lease as cash inflows from operating activities.