Major reasons why a company may become involved in

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21. 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. 22. Which of the following is an advantage of leasing? 23. Which of the following best describes current practice in accounting for leases? 24. 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 21 - 7
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S 25. An essential element of a lease conveyance is that the a. lessor conveys less than his or her total interest in the property. b. lessee provides a sinking fund equal to one year's lease payments. c. property that is the subject of the lease agreement must be held for sale by the lessor prior to the drafting of the lease agreement. d. term of the lease is substantially equal to the economic life of the leased property. S 26. What impact does a bargain purchase option have on the present value of the minimum lease payments computed by the lessee? P
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