ECONOMICS
SAVING AND INVESTING
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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Sale of stock by a private company
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Friend of relative receives an ownership interest in the business
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Method of gaining the use of assets for the business
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Business selling stocks directly to the public
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Detailed explanation-1: -An operating lease is more typically found where the assets do have a residual value such as aircraft, vehicles and construction plant and machinery. The customer gets the use of the asset over the agreed contract period in return for rental payments.
Detailed explanation-2: -Description: In a capital lease, the lessor transfers the ownership rights of the asset to the lessee at the end of the lease term. The lease agreement gives the lessee a bargain option by dint of which the lessee can buy the asset at a discounted price than the fair market value at the end of the lease term.
Detailed explanation-3: -Finance leasing. Operating leasing. Contract hire.
Detailed explanation-4: -Operating Lease-Similar to rental agreements, operating leases are for short durations. Capitalized Lease-Leases that last for almost the life of the asset and where the asset is worthless after the lease period.