Operating leases often have terms that include
A) full amortization over the life of the lease.
B) very high penalties if the lease is canceled.
C) restrictions on how much the leased property can be used.
D) much longer lease periods than for most financial leases.
E) maintenance of the equipment by the lessor.

Question

Quizplus · Accepted Answer

Operating leases typically include maintenance of the equipment by the lessor, as this is one of the main advantages of this type of lease compared to financial leases. The other options are not typically included in operating leases. A) Full amortization over the life of the lease is a characteristic of financial leases, while operating leases usually only require payments for the duration of use. B) Very high penalties for cancellation are also more common in financial leases, which are typically longer-term and more binding. C) Restrictions on how much the leased property can be used would likely limit the lessee's ability to use the equipment for its intended purpose, which would not be beneficial for the lessor. D) Operating leases often have shorter terms than financial leases, as they are designed to provide flexibility to the lessee.

Operating Leases Often Have Terms That Include