Question

Assets leased under ______ leases generally have a usable life longer than the term of the...

Assets leased under ______ leases generally have a usable life longer than the term of the lease.

A)financial

B)operating

C)capital

D)direct

Business   Finance   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

Answer : Option    B    OPERATING LEASE

In Operating lease, the lease term is significantly lesser than the usable life of the equipment. It is for a shorter period compared to capital lease or financial lease. Thus the assets leased under Operating leases generally have a usable life longer than the term of the lease.

In Financial lease, the ownership is transferred to the lessee before the lease expires. It is long term in nature.

Capital lease is a type of lease in which the lessor agrees to transfer the ownership rights to the lessee after the completion of the lease term. These leases are long term and non cancellable in nature.

In Direct lease, the lessee and lessor are two different entities. All equipment leases fall under this category. Direct lease can be of two party agreement or three party agreement

0 0
Know the answer?
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

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
Why would a lessee rather have an operating lease than a capital lease? A) operating leases...
Why would a lessee rather have an operating lease than a capital lease? A) operating leases do not require reporting long-term liabilities. B) capital leases would require larger lease payments C) operating leases permit a tax deduction for depreciation D) noncancelable operating leases involve less risk
Analyzing and Interpreting Footnote on Operating and Capital Leases Assume Verizon Communications, Inc., provides the following...
Analyzing and Interpreting Footnote on Operating and Capital Leases Assume Verizon Communications, Inc., provides the following footnote relating to its leasing activities in its 10-K report. The aggregate minimum rental commitments under noncancelable leases for the periods shown at December 31, 2010, are as follows: Years (dollars in millions) Capital Leases Operating Leases 2011 $ 83 $ 1,449 2012 71 1,316 2013 67 1,056 2014 63 806 2015 46 527 Thereafter 161 1,937 Total minimum rental commitments 491 $ 7,091...
Bright Company leases a piece of equipment to Rod Company for 10 years under the following...
Bright Company leases a piece of equipment to Rod Company for 10 years under the following terms: 1) the leases is an operating lease, 2) Rod agrees to pay $35,000 at the beginning of each year. Bright purchased the equipment at a cost of $350,000. the equipment has an estimated life of 10 years and Bright uses straight-line depreciation. assume that there are no initial direct costs involved in this lease. What would be the journal entry Bright would use...
International Accounting Standards (IFRS) 16 Leases standardizes the accounting treatment and disclosure requirements of assets held...
International Accounting Standards (IFRS) 16 Leases standardizes the accounting treatment and disclosure requirements of assets held under lease. The approach to lessor accounting classifies leases into two types, Operating lease and Finance lease. Required: Discuss any five indications that may provide evidence that a particular lease agreement may be: An operating lease                                                                  A finance lease                                                                       Briefly explain the effect of treating a finance leased asset as though it was an operating leased asset on assets, liabilities, ROCE and Gearing ratios....
Assume Verizon Communications, Inc., provides the following footnote relating to its leasing activities in its 10-K...
Assume Verizon Communications, Inc., provides the following footnote relating to its leasing activities in its 10-K report. The aggregate minimum rental commitments under noncancelable leases for the periods shown at December 31, 2010, are as follows: Years (dollars in millions) Capital Leases Operating Leases 2011 $ 83 $ 1,449 2012 71 1,316 2013 67 1,056 2014 63 806 2015 46 527 Thereafter 161 1,937 Total minimum rental commitments 491 $ 7,091 Less interest and executory costs (89) Present value of...
Airline CF leases all its aircraft under capital / finance leases. Airline O leases all its...
Airline CF leases all its aircraft under capital / finance leases. Airline O leases all its aircraft under operating leases. Assuming that the two airlines are otherwise identical except for the mentioned lease classifications, which of the following comments is true: Select one: a. None of the listed answers b. When comparing aircraft capitalized on the balance sheet, Airline CF has less than O c. Airline O has a higher EBITDA margin d. Airline O has more liabilities e. Airline...
ABC enters into 2 leases for 2 machines. Machine 1 is leased from DEF Capital, and...
ABC enters into 2 leases for 2 machines. Machine 1 is leased from DEF Capital, and provides ABC a 5 year lease on January 1 good for 5 years (that machine has an expected life of 10 years , no residual) for $1,000 month. The fair market value of the machine is $100,000. This lease is non-cancellable and first payment is due 1/1/2015. ABC's incremental borrowing rate is 10%. GHI operating leases ABC machine also a non-cancellable term of 5...
1. Money market assets (cash & accounts receivables) have a longer term to maturity and are...
1. Money market assets (cash & accounts receivables) have a longer term to maturity and are thus more volatile that capital market assets (stocks & bonds). True or false 2. Maximizing shareholder value of the firm is the primary goal of financial management. True or false? 3. Using semi-annual compounding rather than annual compounding will increase the future value of a single sum or n annuity. True or false?
At January 1, 2018, Apricot leased restaurant equipment from Anderson Corporation under a six-year lease agreement...
At January 1, 2018, Apricot leased restaurant equipment from Anderson Corporation under a six-year lease agreement in an operating lease. The lease agreement specifies annual payments of $20,000 beginning January 1, 2018, the beginning of the lease, and at each December 31 thereafter through 2022. The equipment was acquired recently by Anderson at a cost of $105,000 (its fair value) and was expected to have a useful life of eight years with no salvage value at the end of its...
Which of the following items would require a lessor to classify a lease as an operating...
Which of the following items would require a lessor to classify a lease as an operating lease? A) The lease contains a bargain purchase option. B) Ownership of the property is transferred to the lessee during the lease term. C) The lease term is 80% of the estimated economic life of the leased property. D) The collectability of the minimum lease payments is highly uncertain. Triple Tango Track leases exercise equipment to its customers under direct-financing leases. Typically the equipment...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT