Which of the Following Is a Reason a Lessee Would

question 58

Multiple Choice

Which of the following is a reason a lessee would enter into an operating lease instead of buying an asset?

• A)The risk of loss from obsolescence is reduced.
• B)The company's ability to borrow increases due to larger assets.
• C)The company can claim capital cost allowance.
• D)The company benefits from the appreciation in value of the asset.

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Definitions:

Profit Maximizing

A method where businesses determine the price and output level that returns the greatest profit.

Fuel Sources

Materials or substances used to generate power or energy, typically to produce heat, light, or to power engines.

Inputs

Resources used in the production process, including labor, technology, and materials.

Economies Of Scale

Situation in which output can be doubled for less than a doubling of cost.