One of the primary advantages of a sale and leaseback arrangement is the:
A) Immediate positive effects on the cash ﬂows and ﬁnancial status of the lessee.
B) Immediate positive effects on the cash ﬂows of the lessor.
C) Favourable loan terms available to the lessee.
D) Immediate recognition of a capital gain by the lessor.
E) Immediate write-off of the asset cost by the lessor.

Question

Quizplus · Accepted Answer

A sale and leaseback arrangement allows the lessee to generate cash by selling an asset and leasing it back from the buyer, which can improve the cash flows and financial status of the lessee in the short-term. This is the primary advantage of the arrangement. Choices B, C, D and E are not the primary advantages of a sale and leaseback arrangement. While they may be benefits, they are not the primary advantage.

One of the Primary Advantages of a Sale and Leaseback