A Lease in Which the Lessor Borrows from a Bank

question 63

Multiple Choice

A lease in which the lessor borrows from a bank or other lender to obtain the initial capital for the purchase of an asset and using the lease payments to pay the interest and principal on the loan is called a:

• A)sales-type lease.
• B)direct lease.
• C)sale and leaseback.
• D)leveraged lease.
• E)synthetic lease.

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Definitions:

Retained Earnings

Cumulative net income of a company that has not been distributed to shareholders as dividends, reinvested in the business.

Non-Controlling Interest

The equity in a subsidiary not attributable, directly or indirectly, to a parent company.

Consolidated Shareholders' Equity

This is the total equity owned by shareholders as reported in the consolidated financial statements of a parent company and its subsidiaries.

Equity Method

An accounting technique used to record investments in which the investor has significant influence over the investee, typically through owning a large percentage of its stock.