If a leased asset has maintenance offered as an included extra, such an extra would be evaluated differently from other leasing cash flows in this way.
A)maintenance would be estimated over shorter time intervals than the lease.
B)maintenance would represent an extra cost to the lessee.
C)maintenance would be discounted at a higher discount rate to reflect risk, and represent a cash inflow for lessee.
D)maintenance would all be paid up front.

Question

Quizplus · Accepted Answer

Maintenance included in a lease typically represents a benefit to the lessee, as it reduces their out-of-pocket expenses for upkeep. This benefit can be considered a cash inflow or a reduction in cash outflows. The discount rate applied to these cash flows might be adjusted to reflect the risk associated with the maintenance service's value over time, potentially being higher if the maintenance is deemed risky or uncertain.

If a Leased Asset Has Maintenance Offered as an Included