An operating lease is cancelable because:
A)The asset is easily broken or damaged
B)The lessee typically is uncertain about his use needs for the asset
C)The lessor may need the asset for some other purpose
D)The lessee is not a good credit risk

Question

Quizplus · Accepted Answer

An operating lease is cancelable because the lessee typically is uncertain about his use needs for the asset, and thus has the option of canceling the lease before its expiration. This provides flexibility for the lessee, allowing them to only lease the asset for the time they actually need it. The other options are not correct because the cancelability of an operating lease is not related to the ease of damage to the asset, the lessor's needs, or the lessee's credit risk.

An Operating Lease Is Cancelable Because