Which one of the following is most likely the primary reason why a lessee opts to lease an asset on a short-term basis rather than buy that asset?
A)keep the asset off the balance sheet
B)tax avoidance
C)lower total cost
D)increased collateral
E)nonrecourse protection

Question

Quizplus · Accepted Answer

The primary reason why a lessee opts to lease an asset on a short-term basis rather than buy that asset is typically to lower total cost. Leasing allows the lessee to use the asset without having to pay for the full cost of ownership, including maintenance and depreciation expenses. This can be especially beneficial for short-term needs or for assets that may become obsolete quickly. Keeping the asset off the balance sheet, tax avoidance, increased collateral, and nonrecourse protection are all potential benefits of leasing, but they are not the primary reason why a lessee would opt for a short-term lease over buying the asset.

Which One of the Following Is Most Likely the Primary