ZuoTi.Pro
Question

Determine whether the following description is true of a capital lease, an operating lease, neither or...

  • Determine whether the following description is true of a capital lease, an operating lease, neither or both. "A method of financing an asset like equipment without purchasing it outright with equity" Capital lease 
  • Operating lease 
  • Both 
  • Neither
business   accounting   
0 0
Add a comment Improve this question Transcribed image text
Next > < Previous
Sort answers by oldest

Homework Answers

✔ Recommended Answer
Answer #1

Answer: Both

Explanation: In either case of leasing there is no outright purchase. Lease payments towards the right to use asset is paid in both the cases. At the end of lease period, finance lease may transfer its ownership at lower price. But in either case, there is no transfer of ownership (which is important for a purchase) outrightly.

0 0
Add a comment
Know the answer?
Add Answer to:
Determine whether the following description is true of a capital lease, an operating lease, neither or...
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Similar Homework Help Questions

  • 1.Select one advantage of IRR as a capital budget method. a) It is more useful than...

    1.Select one advantage of IRR as a capital budget method. a) It is more useful than NPV analysis when evaluating mutually exclusive projects. b) It accurately reflects the reinvestment rate risk. c) It is simple to understand because it ignores the time value of money. d) The IRR can easily be evaluated alongside a company's threshold rate. 2. A company invests $600,000 in a project with the following net cash flows: Year 1: $130,000 Year 2: $113,000 Year 3: $98,000...

  • 1. Which of the following statements about lease financing is incorrect: Lease financing increases the risk...

    1. Which of the following statements about lease financing is incorrect: Lease financing increases the risk for the firm. Lease financing can be considered a form of debt financing. Lease financing is subordinated to equity. Lease financing is typically considered a capital structure component. 2. Hybrid financing lowers the WACC for the firm. will result in dilution for the shareholders. is more risky then equity. Both A. and B. are correct. 3. What do lease financing and hybrid financing in...

  • Aneeka owns 40 shares of stock in Company A that are valued at $15/share.After Company A...

    Aneeka owns 40 shares of stock in Company A that are valued at $15/share.After Company A repurchases 5% of its outstanding shares on the open market, what does Aneeka own? 38 shares of stock valued at a lower price/share 40 shares valued at a higher price/share 40 shares valued at a lower price/share 38 shares of stock valued at a higher price/share Which of the following investors would likely prefer a cash dividend over a stock dividend? Kylie is a...

  • Principal Components is considering whether to lease or purchase some specialized equipment. The capital budgeting analysis...

    Principal Components is considering whether to lease or purchase some specialized equipment. The capital budgeting analysis indicating the equipment should be secured already has not been completed. The equipment has a five-year economic and tax life, and the company uses a straight-line depreciation method. The equipment costs $1,000,000 if purchased or it can be leased for five-years at $280,000 per year. The first lease payment is payable in advance. The equipment’s salvage value is estimated to be $100,000. Revenue is...

  • Which of the following is a characteristic specific to an operating lease? Group of answer choices...

    Which of the following is a characteristic specific to an operating lease? Group of answer choices A.) The only asset reported in connection with the lease is the leased equipment. B.)The amount of lease liability is calculated at the present value of the future cash flows. C.)The only liability to be reported is the amount of rent expense that is currently due. D.) The leased asset is depreciated by the lessee over its useful life. E.) The interest expense is...

  • Determine, on a present worth basis, whether it is more economical to lease or purchase a...

    Determine, on a present worth basis, whether it is more economical to lease or purchase a machine. The first cost of purchasing the machine is $100000, an expected life of 6 years, annual operating and maintenance cost of $7000 and a salvage value of $13000. The machine can be leased for $25000 annually. Operating expenses are expected to be $800. Use an interest rate of 12%

  • Which of the following is not a condition requiring the use of the capital lease reporting...

    Which of the following is not a condition requiring the use of the capital lease reporting method? Select one: A. The lease automatically transfers ownership of the leased asset from the lessor to the lessee at the termination of the lease. B. The lease provides that the lessee can purchase the leased asset for a nominal amount (bargain purchase price) at the termination of the lease. C. The lease term is at least 75% of the remaining estimated economic useful...

  • Question 1 Identify whether each of the following contracts is an operating or a financing jarah...

    Question 1 Identify whether each of the following contracts is an operating or a financing jarah contract. 1) An asset, with fair value of KD 100,000 and a useful life of 20 years, is leased for 15 years with present value of lease payment of KD 80,000. The contract does not state a transfer of ownership at the end of the lease period. 2) An asset, with fair value of KD 300,000 and a useful life of 15 years, is...

  • Determine whether C. C, both, or neither can be placed in each blank to form a...

    Determine whether C. C, both, or neither can be placed in each blank to form a true statement. {x|x is someone who eats meat or someone who is a vegetarian) {x|x is a person} Select the correct answer below. oc Neither Both 0 Click to select your answer.

  • Indicate whether each of the following describes an accounting treatment that is acceptable under IFRS, U.S....

    Indicate whether each of the following describes an accounting treatment that is acceptable under IFRS, U.S. GAAP, both, or neither. A company takes out a loan to finance the construction of a building that will be used by the company. The interest on the loan is capitalized as part of the cost of the building. Inventory is reported on the balance sheet using the last-in, first-out (LIFO) cost flow assumption. ,The gain on a sale and leaseback transaction classified as...

ADVERTISEMENT
Free Homework Help App
Download From Google Play
Scan Your Homework
to Get Instant Free Answers
Need Online Homework Help?
Ask a Question
Get Answers For Free
Most questions answered within 3 hours.
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT