Core idea
A lessee generally recognizes a right-of-use asset and a lease liability when a contract conveys the right to control the use of an identified asset for a period of time.
FAR topic guide
Leases explained for FAR CPA candidates.
Lease questions often test whether you understand the asset, liability, classification, and expense pattern rather than only memorizing labels.
Last reviewed June 5, 2026. World of Accountants is independent and not affiliated with the AICPA, NASBA, Becker, NINJA, UWorld, Gleim, or other CPA review providers.
What FAR likes to test
Watch for lease term, purchase options, present value, transfer of ownership, and whether the facts change classification or measurement.
Common miss
Candidates often jump to rent expense without first asking whether the arrangement creates a right-of-use asset and lease liability.
How to practice
Work one lease question at a time, write the fact that controls the answer, then compare your reasoning with the explanation.
FAR topic guides
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Practice loop
Use the topic, then answer questions while the idea is fresh.
Short practice sets are enough to expose whether the rule is sticking.