Which of the Following Is Not an Advantage of a Lease

question 23

Multiple Choice

Which of the following is not an advantage of a lease financing arrangement?

• A) Companies with losses can still depreciate equipment if leased from a finance company.
• B) Repossession is easier in a lease-finance arrangement because the finance company already owns the equipment.
• C) Finance companies are in a good position to sell a repossessed asset, especially if they are a subsidiary of the equipment manufacturer.
• D) The lessee often does not have to make as large of an upfront payment, relative to a straight loan.

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Definitions:

Health Benefit

Refers to the positive effects on health and well-being provided by certain actions, policies, or products, including medical insurance coverage provided by employers or governments.

Fixed Expense

Costs or expenses that remain constant for a period of time regardless of changes in business activity levels, such as rent or salaries.

Net Assets

The total value of an organization's assets minus its total liabilities, representing the organization's financial health.

Physical Assets

Tangible resources owned by an individual or organization, including equipment, buildings, and land.