Why is the cost of financing with a sale-leaseback essentially the same as the return from continuing to own?

Q: What are the major advantages of leasing a fixed asset rather than purchasing it?

A: A lease can be defined as an arrangement between the lessor(owner of the asset) and the lessee (user…

Q: What is non-tax-oriented lease?

A: Non- tax Oriented lease: The lease where the lessor cannot avail tax exemptions for the capital…

Q: What will be the Return from Owning versus Leasing explain with example?

A: Return from owning an asset: The first benefit of owning an asset is that individuals can use an…

Q: What is a purchase option? How does it affect accounting for a lease?

A: Purchase option : A purchase option is an agreement that gives the lessee a choice to purchase the…

Q: How does Leasing offer protection against the risk of declining asset values?

A: Leasing:    The term leasing defines that it is a process of renting a property to someone the…

Q: What is a sale-and-leaseback transaction?

A: Sale and leaseback is a deal in which the owner of an asset trades an asset, typically real estate,…

Q: Determine the indifference price for a property that had an assumable below-market-rate loan?

A: Indifference price is the price at which the investor is indifferent to investing in any of the two…

Q: What is the concept of sale-leaseback agreement?

A:

Q: Why should investors be concerned about market rents if they are purchasing a property subject to…

A: Lease is an agreement by which one party agrees to use the property such as land or building of…

Q: How does the company can benefit indirectly by leasing assets rather than buying?

A: Company can take benefit of leasing assets rather than buying assets due to many reasons: Leasing…

Q: Explain Lease-versus-Own Analysis?

A: Owning is the right of an entitlement to an asset by purchasing it while leasing is the contract by…

Q: What is the difference between an “operating” and a “capital” lease? In easy terms please!

A: The criteria for defining the lease as a capital lease or operating lease   As per the notes issued…

Q: When are initial direct costs recognized in an operating lease? In a sales-type lease with selling…

A: Initial direct cost paid by the lessee is added to the right-of-use asset. If incurred by the…

Q: What do you think is the main difference of accounting for lease on the part of the lessee and…

A: Lease is regarded as the contract between two parties those to use the asset of the owner by another…

Q: If the lessee and lessor use different interest rates to account for a finance/sales-type lease,…

A: Lease is agreement where lessor (asset owner) allows lessee (tenant) to use lessor’s asset for…

Q: What is the difference between a tax-oriented lease and a nontax-oriented lease?

A: A tax-oriented lease: A tax-oriented lease, occasionally named a true lease, which offer the lessor…

Q: When can a lease create both an asset and a liability for the lessee?

A: Lease is an agreement between two persons in which one grants the right to another to use a…

Q: How can the marginal rate of return be used to decide when to sell a property?

A: Answer: The following are the factors that cause a change in marginal rate of return over time, An…

Q: How does the Leasing reduce the upfront cash needed to use an asset?

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Q: Would using a higher discount rate increase or decrease the amount of lease liability recorded?

A: Lease: A contractual agreement for an asset between two parties. The parties involved are lessee and…

Q: Why might refinancing be considered an alternative to a sale-leaseback?

A: Introduction: The given question is related to the concept of real estate finance and investments.…

Q: What is difference between lease method and installment method?

A: Lease:   It is an agreement between an owner of an asset (Lessor) and a tenant (lessee) where the…

Q: Leasing Cost Why the aftertax borrowing rate is the appropriate discount rate to use in lease…

A: Lease evaluation is the process where financial lease is evaluated on the basis of its feasibility…

Q: What are the economic benefits of leasing vs ownership of assets?

A: MEANING:- Leasing of Assets - The leasing of assets refers when the owner gives the right to use…

Q: What are the benefits to lessees of operating lease accounting?

A: Operating lease: The operating lease refers to the contract between two parties where one party…

Q: What is meant by “loss to lease”? Explain?

A: Loss to lease: It is the term used in Real Estate in leasing of property mainly apartment complexes,…

Q: Discuss the residual value of the leased asset. How does it impact the PV of rental payments…

A: Lease means a type of agreement in which one party gives its valuable assets to other party for a…

Q: What are the disadvantages of lease?

A: Lease:   Lease is a contractual agreement whereby the right to use an asset for a particular…

Q: What is selling profit on a sales-type lease? How do we account for a sales-type lease with a…

A: Sales-type lease: Sales type lease in equivalent type of direct financing whereby the owner (lessor)…

Q: Explain the recognition of profit on a finance lease transaction for lessorswho are manufacturers or…

A: A lease can be defined as a contract or agreement that allows the lessee to pay a certain amount of…

Q: When a fixed asset is sold for less than book value, which one of the following will decrease?

A: Ratio Analysis: This refers to the performance measurement of the business, in order to know the…

Q: Can the present value of minimum lease payments differ between the lessor and lessee? If so, how?

A: Leases: Lease is a contractual agreement whereby the right to use an asset for a particular period…

Q: When are initial direct costs recognized in an operating lease? In a direct financing lease? In a…

A:

Q: What are the major advantages to a lessor for becoming involved in a leasing arrangement?

A: The Effect of Residual Values, Guaranteed and Unguaranteed is as follows: In setting the lease…

Q: How does the analysis of a sale-leaseback differ from the analysis of owning versus leasing?

A: A sale lease back is very beneficial for the company because it helps the company to sell the asset…

Q: what will be the Market Leasing Assumptions with Renewal Probabilities?

A: Market leasing assumption is a very important assumption which is used in calculating the value of…

Q: Why does a finance lease is economically similar to a purchase of the asset?

A: There are many similarities between purchase of a asset and Finance lease, such as: In a finance…

Q: What factors would tend to affect the value of a lease?

A: Lease is a contract between two parties in which one party lends its property or asset to the other…

Q: What discount rate should be used to evaluate a lease? Why?

A: Lease may be defined as the legal contract between two party's lessor and lessee, were one party…

Q: The cost of an asset purchased purchased under a finance lease will be equal to the carrying amount…

A: Cost of an asset purchased under finance lease is recorded at the lower of fair value of the asset…

Q: What is lease assignment? What is subletting? Explain at least one main difference between these…

A: In the world of finance in general and letting out of properties in particular the concepts of lease…

Q: When is it appropriate for the lessee to use the lessor's implicit rate to calculate the present…

A: In case of lessor implicit rate is not known then lessee should use his own incremental borrowing…

Q: Under normal circumstances, will the carrying value of a long-term asset be equal to its market…

A: Assets are recorded at historical figures.

Q: What difference is between operating lease and finance leasing?

A: A lease is a financial agreement between two parties, i.e., lessor and lessee. A lessor is a person…

Q: Why do person choose to buy on lease?

A: Lease: Lease refers to a contract that outlines the terms under which one agrees to rent his or her…