The contract period of an operating lease tends to ____.
A) be somewhat less than the economic life of an asset
B) be equal to the economic life of the asset
C) be somewhat greater than the economic life of the asset
D) recover the full cost of the asset

Question

Quizplus · Accepted Answer

An operating lease typically has a shorter contract period than the economic life of the asset. This allows the lessee to use the asset for its required period without having to worry about its residual value or disposal. It also allows the lessor to retain ownership of the asset and lease it out to another lessee after the current lease expires.

The Contract Period of an Operating Lease Tends to ____