Zimco Limited, a market research company in Vancouver, is considering acquiring new computers worth about $10 000 to replace outdated ones. If Zimco ends up leasing these computers, what type of lease would the company most likely use?

Question

Quizplus · Accepted Answer

An operating lease is generally used for short-term equipment needs, such as replacing outdated computers. With an operating lease, the company would have the use of the computers but would not own them at the end of the lease term. This type of lease is more like a rental agreement and is often used for equipment that needs to be updated frequently or is not essential to the company's operations. A financial lease or leveraged lease would be more appropriate for long-term equipment needs or for equipment that is essential to the company's operations. A sale-leaseback arrangement would involve the company selling existing equipment and then leasing it back from the buyer, which would not apply in this situation.

Zimco Limited, a Market Research Company in Vancouver, Is Considering