Which of the following is a reason a lessee would enter into an operating lease instead of buying an asset?
A)The risk of loss from obsolescence is reduced.
B)The company's ability to borrow increases due to larger assets.
C)The company can claim capital cost allowance.
D)The company benefits from the appreciation in value of the asset.

Question

Quizplus · Accepted Answer

By entering into an operating lease, the lessee is not responsible for the asset's obsolescence risk, and the lessor bears this risk. This reduces the lessee's potential losses if the asset becomes outdated or ineffective over time.

Which of the Following Is a Reason a Lessee Would