{[ promptMessage ]}

Bookmark it

{[ promptMessage ]}

Chapter19solutions - Chapter 19 Lease Financing ANSWERS TO...

Info iconThis preview shows pages 1–2. Sign up to view the full content.

View Full Document Right Arrow Icon
Chapter 19 Lease Financing ANSWERS TO END-OF-CHAPTER QUESTIONS 19-2 An operating lease is usually cancelable and includes maintenance. Operating leases are, frequently, for a period significantly shorter than the economic life of the asset, so the lessor often does not recover his full investment during the period of the basic lease. A financial lease, on the other hand, is fully amortized and generally does not include maintenance provisions. An operating lease would probably be used for a fleet of trucks, while a financial lease would be used for a manufacturing plant. 19-3 You would expect to find that lessees, in general, are in relatively low income-tax brackets, while lessors tend to be in high tax brackets. The reason for this is that owning tends to provide tax shelters in the early years of a project’s life. These tax shelters are more valuable to taxpayers in high brackets. However, current tax laws have reduced the
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon
Image of page 2
This is the end of the preview. Sign up to access the rest of the document.

{[ snackBarMessage ]}