Debt Displacement Is Associated with Leases Because

question 5

Multiple Choice

Debt displacement is associated with leases because:

• A) all assets not purchased with equity use debt financing.
• B) debt is always a cheaper source of financing and is lost as leasing is used.
• C) ICA3065 and the CRA mandate debt displacement.
• D) lease financing is all debt and causes an imbalance in the optimal debt to equity ratio which reduces future debt financing.

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Definitions:

Contract Amount

The total financial obligation or the sum involved in a contract agreed upon by the parties.

Service of Process

The procedure by which a party to a lawsuit gives an appropriate notice of initial legal action to another party (such as a defendant), court, or administrative body to exercise jurisdiction over that person so as to enable that person to respond to the proceeding.

Intended Beneficiary

An individual or entity explicitly chosen to benefit from a contract, even though they are not a direct party to the agreement.

Incidental Beneficiary

A third party who benefits from a contract between two other parties, even though the benefit was not the contract’s primary purpose or intention.