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

question 76

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 not 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)Sprinter has entered into an financing lease that is recorded as an asset purchase and financing transaction.

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Definitions:

Long-Run Cost Function

A relationship that shows the lowest cost at which a firm can produce any given level of output in the long run, where all inputs are variable.

Marginal Cost Function

is a mathematical representation that shows how the cost of producing one additional unit of a good varies as the quantity of production changes.

Telecommunication Tax

Taxes that are applied specifically to telecommunication services provided to consumers, including telephone and internet services.

Market Supply And Demand

The economic model that explains the interaction between the supply of goods and services and the demand for them, determining their market prices.