A ﬁrm that is very cyclical in nature and requires extra equipment only during its peak periods should consider leasing that equipment using a(n) _____ lease.

Question

Quizplus · Accepted Answer

An operating lease is ideal for a firm that requires equipment only during peak periods because it is a short-term lease typically lasting less than a year. This type of lease allows the firm to have access to the equipment it needs, without the long-term commitment of owning the equipment or making payments for an extended period. Additionally, operating leases are treated as an operating expense on the income statement, providing tax advantages over other types of leases.

A ﬁRm That Is Very Cyclical in Nature and Requires