If the lessor borrows much of the purchase price of a leased asset, the lease is called:
A)a leveraged lease.
B)a sale-and-leaseback.
C)a capital lease.
D)a nonrecourse lease.
E)None of the above.

Question

Quizplus · Accepted Answer

When the lessor borrows much of the purchase price of a leased asset, the lease is called a leveraged lease. In this type of lease, the lessor uses the borrowed funds to purchase the asset, which is then leased to the lessee. The lessor and lender share the risk and rewards of the asset ownership.

If the Lessor Borrows Much of the Purchase Price of a Leased