According to US GAAP, interests incurred on a capital lease are most likely classified under: A. cash flow from operating activities. B. cash flow from financing activities. C. either cash flow from operating or financing activities.

The correct answer is A.An interest expense is classified as a cash outflow from operating activities under US GAAP. Note: IFRS allows the option to classify it either as a financing activity or an operating activity.

CFA Level 1 Question Of The Week - Financial Reporting And Analysis (3) - CFA Level 1

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This topic has 1 reply, 1 voice, and was last updated Dec-199:48 am by Matt_AnalystPrep.

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- Matt_AnalystPrep
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  17 Dec 2019 at 12:04 am
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  According to US GAAP, interests incurred on a capital lease are most likely classified under:
  - A. cash flow from operating activities.
  - B. cash flow from financing activities.
  - C. either cash flow from operating or financing activities.
- Matt_AnalystPrep
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  - CFA Charterholder
  20 Dec 2019 at 9:48 am
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  The correct answer is A.
  
  An interest expense is classified as a cash outflow from operating activities under US GAAP.
  
  Note: IFRS allows the option to classify it either as a financing activity or an operating activity.
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