Barrett Accounting firm purchases a new computer system, which it leases from Financial Equipment Supply. Financial Equipment Supply actually only puts down 20 percent of the money to purchase the new computer system and borrows the rest from Third Street Bank. What best describes this type of lease?

Question

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A leverage lease involves a lessor purchasing leased assets with borrowed funds. In this scenario, Financial Equipment Supply buys the computer system with only 20% down and finances the rest, fitting the definition of a leverage lease.

Barrett Accounting Firm Purchases a New Computer System, Which It