Choose the correct answer

28. Major reasons why a company may become involved in leasing to other companies is (are)

a. interest revenue.

b. high residual values.

c. tax incentives.

d. All of these answers are correct.

29. Which of the following is an advantage of captive leasing companies over the other players in the leasing market?

a. They have access to low-cost funds allowing them to purchase assets at lower cost.

b. They are good at developing innovative contracts that help avoid accounting problems.

c. They provide leasing arrangements for a wider range of products than the parent companys product line.

d. They have the paint-of-sale advantage in finding leasing customers.

30. Which of the following best describes current practice in accounting for leases?

a. Leases are not capitalized.

b. Leases similar to installment purchases are capitalized.

c. All long-term leases are capitalized.

d. All leases are capitalized.

31. While only certain leases are currently accounted for as a sale or purchase, there is theoretic justification for considering all leases to be sales or purchases. The principal reason that supports this idea is that

a. all leases are generally for the economic life of the property and the residual value of the property at the end of the lease is minimal.

b. at the end of the lease the property usually can be purchased by the lessee.

c. a lease reflects the purchase or sale of a quantifiable right to the use of property.

d. during the life of the lease the lessee can effectively treat the property as if it were owned.