Acceptance of equipment by lessee occurs when?

• A. Before delivery
• B. During transit only
• C. After full delivery and operation
• D. Only for used equipment

Answer: (C)

Acceptance by the lessee happens when the asset is delivered and can be put into operation. In other words, the lessee gains control of the equipment and can use it as intended, which typically means the item is delivered, possibly installed and tested, and is ready for use in normal operations. Until that point—if the asset is still in transit, not yet installed, or not functional—the lessee hasn’t yet accepted it.

This is why acceptance is described as occurring after full delivery and operation. It isn’t about mere possession before delivery, nor about transit alone, and it isn’t limited to used equipment—new or used assets can be accepted once they are delivered and capable of operating as required. Once acceptance happens, the asset is ready to be used for its intended purpose and, for accounting purposes, control and the associated obligations are effectively in place.