One Incentive for Entering into Sale-And-Leaseback Arrangements Is

question 161

Multiple Choice

One incentive for entering into sale-and-leaseback arrangements is:

• A)lessor has an abundance of cash.
• B)improvement in cash flow for the lessor.
• C)lessee wants to increase return on investment.
• D)tax implications are favourable for the lessor.
• E)lessee may be able to reduce finance expense through the refinancing aspects of the sale-leaseback.

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Definitions:

Lower Of Cost

An accounting principle that dictates that inventory and other assets should be reported at the lower of their historical purchase cost or current market value.

Market Method

A valuation method used to determine the fair value of assets and liabilities, based on their selling prices in active markets.

LIFO

Last-In, First-Out, an inventory valuation method where the most recently acquired items are recorded as sold first.

Retail Inventory Method

An accounting method used to estimate inventory cost for retail businesses by applying a constant gross margin percentage.