This textbook is available atAmazon.com Logo
Hospitality Industry Managerial Accounting 8th Edition

Hospitality Industry Managerial Accounting (8th Edition)

Book Edition8th Edition
Author(s)Schmidgall
ISBN9780866124973
PublisherEduc. Inst. Of The American Hotel & Motel Assoc.
SubjectAccounting

Chapter 14, End of Chapter, Review Questions, Exercise 1

Page 692

Here is a tip:

A lease is a contract between two parties in which one party conveys equipment to another party in exchange for money for a specific time period.

Explanation

  • When a lessee obtains equipment on the lease financing, there is no effect on the cash amount as lease based finance does not decrease the amount of cash.
  • The lessee can also be benefited from tax purposes through lease financing.
  • Lease financing is easier as compared to external financing as a lease requires only one document, that is, the lease agreement.

Verified Answer

Unaffected cash amount, tax benefits, and ease of process are the main benefits of lease financing for a lessee.

How would you rate this answer and explanation?
Did you like this example?
Subscribe for full access
Page 692