Asked by
Melissa Hernandez
on Nov 07, 2024
Verified
Which of the following is the best definition of a tax-oriented lease?
A) A shorter-term lease where the lessor is responsible for insurance, taxes, and upkeep.
B) A financial lease in which the lessee sells an asset to the lessor and then leases it back.
C) A financial lease in which the lessor is the owner for tax purposes. Also called a true lease or a tax lease.
D) A leveraged lease is a tax-oriented lease involving three parties: a lessee, a lessor, and a lender.
E) A longer-term, fully amortized lease under which the lessee is responsible for upkeep. Usually not cancellable with-out penalty.
Tax-Oriented Lease
A financial lease in which the lessor is the owner for tax purposes. Also called a true lease or a tax lease.
Lessor
The party who rents or leases a property or asset to another party, known as the lessee.
Financial Lease
A lease agreement where the lessee assumes most of the risks and rewards of ownership, often with an option to purchase the asset at the end of the lease term.
- Determine essential language and notions in lease accounting, including sale and leaseback, leveraged leases, and distinguishing between operating and financial leases.
Verified Answer
SD
Learning Objectives
- Determine essential language and notions in lease accounting, including sale and leaseback, leveraged leases, and distinguishing between operating and financial leases.