A sales leaseback can best be deﬁned as:
A) A short term lease where the lessor is responsible for the insurance, tax and upkeep. Often cancellable on short notice.
B) A longer term, fully amortized lease under which the lessee is responsible for the upkeep. Usually not cancellable without penalty.
C) A ﬁnancial lease in which the lessor is the owner for tax purposes.
D) A ﬁnancial lease in which the lessee sells an asset to the lessor and then leases in back.
E) A ﬁnancial lease where the lessor borrows a substantial of the cost of the leased asset.

Question

Quizplus · Accepted Answer

A sales leaseback is a financial lease in which the lessee sells an asset to the lessor and then leases it back. This allows the lessee to free up cash tied up in the asset while still being able to use it. The lessor becomes the owner of the asset for tax purposes, and the lessee makes lease payments to use the asset.

A Sales Leaseback Can Best Be Deﬁned As