Choose the correct answer
28. Major reasons why a company maybecome involved in leasing to other companies is (are)
a. interest revenue.
b. high residual values.
c. tax incentives.
d. All of these answers are correct.
29. Which ofthe following is an advantage of captive leasing companies over theother players in the leasing market?
a. They have access to low-cost funds allowing themto purchase assets at lower cost.
b. They are good at developing innovative contractsthat help avoid accounting problems.
c. They provide leasing arrangements for a widerrange of products than the parent companyâs product line.
d. They have the paint-of-sale advantage in findingleasing customers.
30. Which ofthe following best describes current practice in accounting forleases?
a. Leases are not capitalized.
b. Leases similar to installment purchases arecapitalized.
c. All long-term leases are capitalized.
d. All leases are capitalized.
31. While only certain leases arecurrently accounted for as a sale or purchase, there is theoreticjustification for considering all leases to be sales or purchases.The principal reason that supports this idea is that
a. all leases aregenerally for the economic life of the property and the residualvalue of the property at the end of the lease is minimal.
b. at the end of thelease the property usually can be purchased by the lessee.
c. a lease reflects thepurchase or sale of a quantifiable right to the use ofproperty.
d. during the life of thelease the lessee can effectively treat the property as if it wereowned.
Choose the correct answer
28. Major reasons why a company maybecome involved in leasing to other companies is (are)
a. interest revenue.
b. high residual values.
c. tax incentives.
d. All of these answers are correct.
29. Which ofthe following is an advantage of captive leasing companies over theother players in the leasing market?
a. They have access to low-cost funds allowing themto purchase assets at lower cost.
b. They are good at developing innovative contractsthat help avoid accounting problems.
c. They provide leasing arrangements for a widerrange of products than the parent companyâs product line.
d. They have the paint-of-sale advantage in findingleasing customers.
30. Which ofthe following best describes current practice in accounting forleases?
a. Leases are not capitalized.
b. Leases similar to installment purchases arecapitalized.
c. All long-term leases are capitalized.
d. All leases are capitalized.
31. While only certain leases arecurrently accounted for as a sale or purchase, there is theoreticjustification for considering all leases to be sales or purchases.The principal reason that supports this idea is that
a. all leases aregenerally for the economic life of the property and the residualvalue of the property at the end of the lease is minimal.
b. at the end of thelease the property usually can be purchased by the lessee.
c. a lease reflects thepurchase or sale of a quantifiable right to the use ofproperty.
d. during the life of thelease the lessee can effectively treat the property as if it wereowned.
