CHAPTER 26
Leasing
I. DEFINITIONS
LESSEE
a 1. The user of an asset in a leasing arrangement is called the: a. lessee. b. lessor. c. guarantor. d. trustee. e. manager.
LESSOR
b 2. The owner of an asset in a leasing arrangement is called the: a. lessee. b. lessor. c. guarantor. d. trustee. e. manager.
OPERATING LEASE
c 3. A shorter-term lease under which the lessor is responsible for the insurance, taxes, and
upkeep while the lessee can cancel the lease on short notice is called a(n) _____ lease.
a. open b. straight c. operating d. financial e. tax-oriented
FINANCIAL LEASE
d 4. A longer-term, fully-amortized lease under which the lessee is responsible for
insurance, taxes, and upkeep and which the lessee generally cannot cancel without incurring a penalty is called a(n) _____ lease.
a. open b. straight c. operating d. financial e. tax-oriented
TAX-ORIENTED LEASE
d 5. A financial lease in which the lessor is the owner for tax purposes is called a(n) _____
lease.
a. open b. straight c. operating d. tax-oriented e. tax-exempt
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LEVERAGED LEASE
a 6. A financial lease in which the lessor borrows a substantial fraction of the cost of the
leased asset on a nonrecourse basis is called a(n):
a. leveraged lease. b. sale and leaseback arrangement. c. operating lease. d. tax-oriented lease. e. straight lease.
SALE AND LEASEBACK
b 7. A financial lease in which the lessee sells an asset to the lessor and then leases it back
is called a(n):
a. leveraged lease. b. sale and leaseback arrangement. c. operating lease. d. tax-oriented lease. e. straight lease.
NET ADVANTAGE TO LEASING
c 8. The net present value that is calculated when deciding whether to lease an asset or to
buy it is called the:
a. open interest net present value. b. depreciated net present value. c. net advantage to leasing. d. profitability index. e. average accounting ratio for leasing.
II. CONCEPTS
LEASING VERSUS BUYING
b 9. Which one of these statements is correct concerning the lease versus buy decision? a. The lessor is primarily concerned with returning the asset at the end of the lease term without incurring any additional charges. b. The lessee is primarily concerned about the use of the asset. c. If Dell Computer became a lessor of its own computers they would be doing direct leasing. d. A firm should always purchase an asset rather than lease it if the asset has a positive salvage value. e. Dell Computer would be a captive finance company if it became a lessor of its own computers.
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DIRECT LEASE
d 10. In a direct lease the lessor: I. is the end user of the asset. II. buys the leased asset from the manufacturer. III. owns the asset. IV. is generally an independent leasing company. a. II and III only b. I and IV only c. III and IV only d. II, III, and IV only e. I, II, III, and IV
OPERATING LEASE
d 11. Which of the following statements represent characteristics of an operating lease? I. The lessee is generally responsible for the maintenance of the leased asset. II. The lease payments are sufficient to fully cover the lessor’s cost of purchasing the asset. III. The lease term is less than the economic life of the asset that is being leased. IV. The lessee generally has the right to cancel the lease early. a. I and III only b. II and IV only c. I and II only d. III and IV only e. I, II, and III only
OPERATING LEASE
d 12. To determine whether or not an operating lease should be cancelled early, the lessee should compare the: a. number of months they have leased the asset to the number of months remaining in the lease period. b. present value of the future lease payments to the amount already invested in the lease. c. future value of the asset to the salvage value at the time the lease expires. d. present value of the future lease payments to the value they place on the asset at that point in time. e. rate of return on the lease to their current internal financing cost.
OPERATING LEASE
a 13. Which one of the following statements is correct concerning an operating lease? a. The leased asset will have a significant residual value at the end of the lease term. b. The lease will be recorded as a capital lease on the balance sheet of the lessee. c. The lessor can terminate the lease at any time without penalty. d. The lease term is generally equal to the economic life of the leased asset. e. The lessee is responsible for the maintenance and insurance related to the leased asset.
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OPERATING LEASE
c 14. If a firm wishes to keep a lease off of its balance sheet, it needs to use a(n): a. tax-oriented lease. b. leveraged lease. c. operating lease. d. sale and leaseback arrangement. e. financial lease.
OPERATING LEASE
e 15. If you are analyzing a firm’s financial position, you should: a. completely ignore any financial leases in which the firm is involved. b. completely ignore any operating leases since they do not affect the balance sheet. c. consider the effects of an operating lease only if it is recorded as a liability on the firm’s balance sheet. d. ignore the operating leases since the amount shown as a liability is offset by an equal amount recorded as an asset of the firm. e. consider the effects that all of the operating leases may have on the firm.
OPERATING LEASE
a 16. A firm that is very cyclical in nature and requires extra equipment only during its peak periods should consider leasing that equipment using a(n) _____ lease. a. operating b. tax-oriented c. sale and buyback d. leverage e. financial
FINANCIAL LEASE e 17. A financial lease: I. is generally a fully amortized lease. II. usually requires the lessor to insure the asset. III. is generally cancelable without penalty if the lessee provides 30 days advance notice. IV. is referred to as a capital lease by accountants. a. I and III only b. II and IV only c. I and II only d. II and III only e. I and IV only
TAX-ORIENTED LEASE
b 18. If a firm does not expect to owe taxes for a few years and needs some equipment, the
firm should:
a. lease the equipment and retain the tax benefits. b. lease the equipment with the lessor retaining the tax ownership of the asset. c. borrow the money to buy the asset and then depreciate it using MACRS depreciation. d. buy the equipment with cash and depreciate it using MACRS. e. buy the equipment and depreciate it straight-line over the life of the asset.
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LEVERAGED LEASE
d 19. If a lessor borrows money on a nonrecourse basis to purchase an asset which will be leased to another party, then: a. the lessor is responsible for the payments on the borrowed funds whether or not the lessee pays the lease payments. b. the lessee is required to send the lease payments directly to the lender of the funds as payment on the loan to the lessor. c. the loan is considered paid in full if the lessee discontinues making the lease payments or terminates the lease early. d. the lessor is only obligated to make loan payments as long as the lessor is collecting the lease payments. e. the lessor must pursue the lessee if the lessee fails to make the agreed upon lease payments.
SALE AND LEASEBACK AGREEMENT
c 20. If a firm enters a sale and leaseback agreement, then: I. the lessee will benefit from an immediate cash inflow. II. both the lessor and the lessee to that agreement may benefit if the lessor can benefit more from the tax benefits of ownership than can the lessee. III. the lease automatically becomes a nonrecourse lease. IV. the lessee forfeits the right to repurchase the asset at a later date. a. I and III only b. II and IV only c. I and II only d. II and III only e. III and IV only
CAPITAL LEASE
a 21. Which of the following factors will classify a lease as a capital lease for accounting purposes? I. The lease transfers ownership of the asset to the lessee by the end of the lease. II. The lease term is 75 percent or more of the estimated economic life of the asset. III. The lessee can buy the asset at fair market value at the end of the lease. IV. The initial present value of the lease payments equals or exceeds 80 percent of the fair market value of the asset. a. I and II only b. II and III only c. III and IV only d. I and III only e. II and IV only
公司理财 习题库 Chap026
