150k views
0 votes
Based on your understanding of lease contracts, which type of lease cash flow has the most uncertainty?

1) Operating lease
2) Finance lease
3) Capital lease
4) Direct financing lease

User Heracek
by
8.1k points

1 Answer

6 votes

Final answer:

Operating lease has the most uncertainty in terms of cash flow.

Step-by-step explanation:

The type of lease cash flow that has the most uncertainty is the Operating lease. In an operating lease, the lessee does not take full ownership of the asset and there is no transfer of risks and rewards associated with ownership. Therefore, the future cash flows from an operating lease are dependent on various external factors such as market conditions, demand for the asset, and changes in rental rates. This uncertainty makes it difficult to predict and plan for the cash flows accurately.

User Freakish
by
8.1k points