To Determine Whether or Not an Operating Lease Should Be

question 80

Multiple Choice

To determine whether or not an operating lease should be cancelled early, the lessee should compare the:

• A) Number of months they have leased the asset to the number of months remaining in the lease period.
• B) Present value of the future lease payments to the amount already invested in the lease.
• C) Future value of the asset to the salvage value at the time the lease expires.
• D) Present value of the future lease payments to the value they place on the asset at that point in time.
• E) Rate of return on the lease to their current internal financing cost.

---

Definitions:

Stop Payment

An order issued to a bank by an account holder not to pay a specific check that has been written and issued but not yet cashed.

Secondhand Car

A vehicle that has had one or more previous owners before the current possession.

Acceptor

A drawee of a draft who has promised to honor the draft as presented by signing it on its face.

Draft

A written order by which the party creating it orders another party to pay money to a third party. Also called bill of exchange.