Which factor would contribute toward the lessor classifying a lease as a financial lease?
A) Lessor retains risk of breakage to leased asset.
B) Lessor has reward of high resale value.
C) Lessor does not have risk of change in demand for the leased asset.
D) Lessor does not have guaranteed residual value.

Question

Quizplus · Accepted Answer

A financial lease is characterized by the transfer of risks and rewards of ownership to the lessee. If the lessor does not have the risk of change in demand for the leased asset, it indicates that the lessee bears this risk, aligning with the characteristics of a financial lease.

Which Factor Would Contribute Toward the Lessor Classifying a Lease