Which of the following are advantages of leasing?

Question

Quizplus · Accepted Answer

Option A is the only correct advantage of leasing among the given options. Lease obligations are generally less restrictive than bond indentures because they are negotiated directly between the lessor and lessee, without the need for outside parties like banks, underwriters, trustees, and credit rating agencies. The restrictions and covenants are typically tailored to the specific needs of the lessee and are more flexible than the standardized terms of a bond.

Option B is incorrect because leases are usually binding for a fixed term and cannot be terminated without penalties or obligations unless there is a specific clause for early termination. Even then, the lessee may have to compensate the lessor for the remaining lease payments, unpaid rent, maintenance costs, and other expenses that the lessor incurs.

Option C is incorrect because ownership of the leased asset remains with the lessor throughout the lease term, and the lessee only has the right to use the asset subject to the terms of the lease. There may be an option to purchase the asset at the end of the lease term, but that is not automatic and may require additional payments.

Therefore, the best choice(s) for the advantages of leasing is A.

Which of the Following Are Advantages of Leasing