Which of the following statements characterizes a leveraged lease?
A)The lessor borrows part of the acquisition price of the leased asset from a third party lender.
B)The lessor treats the lease as an operating lease.
C)The lessee makes lease payments to the lessor's lender.
D)The lessor's interest rate is always higher because the lease is leveraged.

Question

Quizplus · Accepted Answer

A leveraged lease is a lease in which the lessor borrows a significant portion of the funds necessary to purchase the leased asset from a third-party lender. This allows the lessor to leverage the transaction and potentially obtain a greater return on investment.

Which of the Following Statements Characterizes a Leveraged Lease