Which of the following arises when the lessee can have the incentive to use the asset more than the lessor would prefer?
A) Track the total services obtained from the asset and charge the lessee based on usage.
B) Bundle the lease contract with a service contract.
C) Provide the lessee with the right to buy the asset when the lease expires.
D) All of the above.

Question

Quizplus · Accepted Answer

This situation arises due to the misalignment of incentives between the lessee and the lessor, known as moral hazard. All the options provided (tracking services, bundling lease with service contracts, and providing a purchase option) are strategies to mitigate the risk of the lessee overusing the asset or not maintaining it properly, which can arise from this misalignment.

Which of the Following Arises When the Lessee Can Have