When a company has an obligation or right to repurchase an asset for an amount greater than or equal to its selling price, the transaction should be treated as a
A)outright sale.
B)financing transaction.
C)repurchase transaction.
D)put option.

Question

Quizplus · Accepted Answer

When a company has an obligation or right to repurchase an asset for an amount greater than or equal to its selling price, it is typically treated as a financing transaction because the company retains control over the asset and the transaction is more akin to borrowing funds with the asset as collateral.

When a Company Has an Obligation or Right to Repurchase