Question

While only certain leases are currently accounted for as a sale or purchase, there is theoretical 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.

Answer 1

The principal reason that supports this idea is that: c. a lease reflects the purchase or sale of a quantifiable right to the use of property.

Step-by-step explanation:

Lease is a contract signed between two parties regarding the usage of land, services or property for specific period of time for specific amount.

An essential element of a lease is that the lessor conveys less than his or her total interest in the property.

Generally one company will involve in leasing to other companies because of high residual value, interest revenue and tax incentives.

The penalty will be charged for not renewing the contract. The residual values are guaranteed in the minimum lease payments.