Which of the Following Is Probably Not a Good Reason

question 37

Multiple Choice

Which of the following is probably not a good reason for leasing instead of buying?

• A) Taxes may be reduced by leasing.
• B) Leasing may reduce transactions costs.
• C) Leasing may provide a beneficial reduction of uncertainty.
• D) All of these are good reasons.
• E) All of these are not good reasons.

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Definitions:

Fair Value Measurement

An accounting approach that provides an estimate of the price at which an asset could be exchanged or a liability settled, based on current market conditions.

Financial Instruments

Contracts that give rise to both a financial asset of one entity and a financial liability or equity instrument of another entity, such as stocks, bonds, or derivatives.

FASB

The Financial Accounting Standards Board, which is responsible for establishing and improving financial accounting and reporting standards in the United States.

IASB

The International Accounting Standards Board, an independent body that establishes and approves accounting standards.