If a Lessor Paid $800,000 for an Asset, How Would

question 91

Multiple Choice

If a lessor paid $800,000 for an asset, how would the lessee treat this amount in his financial lease analysis?

• A)lessor would ignore it, since it is a lessor cost.
• B)lessor would treat it as a cash inflow, since he avoids it by leasing.
• C)lessor would amortize it over the lease life as an expense.
• D)lessor would discount it by his cost of capital.

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Definitions:

Uncertainty-Avoidance Cultures

Societies or cultures that have a low tolerance for ambiguity and uncertainty, leading to a preference for clear rules and structures.

Predictability

The degree to which future events or behaviors can be forecasted based on past patterns or data, indicating a level of certainty or expectation.

Loose Culture

A type of organizational culture that is flexible, adaptable, and less governed by strict rules and procedures, often encouraging creativity and innovation.

Social Norms

The accepted behaviors or rules within a society or group that guide actions and expectations without the need for formal laws.