Which One of the Following Statements Is Correct Concerning the Lease

question 63

Multiple Choice

Which one of the following statements is correct concerning the lease versus buy decision?

• A)The lessor is primarily concerned with returning the asset at the end of the lease term without incurring any additional charges.
• B)The lessor is primarily concerned about the use of the asset.
• C)If Dell Computer became a lessor of its own computers it would be engaging in direct leasing.
• D)A firm should always purchase, rather than lease, any asset that has a projected positive salvage value at the end of the relevant period of use.
• E)Lessors provide a source of financing for lessees.

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Definitions:

Carrying Value

The net amount at which an asset is valued on the balance sheet, calculated as the original cost minus any accumulated depreciation, depletion, or amortization.

Discount

A reduction in the price of goods or services, often used as a promotional tool or to encourage quicker payment.

Annual Interest Rate

The percentage of a sum of money charged for its use for one year, representing the cost of borrowing money or the benefit of saving it.

Installment Payment

A method of payment where the total cost of a good or service is divided into smaller amounts to be paid over a specified period.