What conditions define control in a lease?

• A. The lessee can direct the asset’s use but not receive benefits
• B. The customer has both the right to direct the identified asset's use and to obtain substantially all the economic benefits from that use
• C. Control is not required for a lease
• D. The asset must be owned by the lessee

Answer: (B)

In lease accounting, control means the lessee has both the right to direct how the identified asset is used and the ability to obtain substantially all of the economic benefits from that use. This combination shows the lessee can drive the use of the asset and reap the main rewards from it over the lease term, which is what defines a lease.

That’s why the correct description is that the customer has both rights: to direct the asset’s use and to obtain the majority of the economic benefits from that use. If you could direct use but didn’t receive the benefits, you wouldn’t have control for lease purposes. Ownership of the asset isn’t required—the asset can remain with the lessor and still be leased if the lessee has these two rights.