Sprinter Airlines (Sprinter) Needs Additional Aircraft to Expand Internationally, and It

question 100

Multiple Choice

Sprinter Airlines (Sprinter) needs additional aircraft to expand internationally, and it could borrow the needed funds and purchase the aircraft.This arrangement places additional debt on the balance sheet.Instead, Sprinter signs an lease agreement in which it agrees to pay the owner of the aircraft certain amounts each year for 12 years.The aircraft has an estimated service life of 18 years.Sprinter paints its name on the aircraft, uses the aircraft in operations, and makes the required lease payments.Which of the following is/are true?

• A)Sprinter receives benefits when it uses the aircraft, not when it initially signs the lease.
• B)Sprinter has future benefits, not past or current benefits.
• C)Sprinter obtains financing for its flight equipment without showing a liability on the balance sheet.
• D)Sprinter has entered into an operating lease that is an executory contract.
• E)all of the above

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Definitions:

Pairwise Voting

A voting system where choices are compared to each other one pair at a time, with preferences collected and the most preferred option determined through this comparison process.

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A situation where a government's expenditures exceed its revenues, leading to a deficit.

Information Asymmetry

A situation in which one party in a transaction has more or superior information compared to another, often leading to an imbalance in power or decision-making.

Money-Back Guarantee

A promise made by a seller to a buyer to refund the purchase price if the product does not meet certain specified criteria.