Which two of the following five statements are correct?

Select two alternatives:

1. The decision to lease is often driven by real-world market imperfections related to leasing's accounting, tax, and legal treatment.

2. The lease is treated as a capital lease (financial lease) for the lessee and must be listed on the firm's balance sheet if it contains an option to purchase the asset at its fair market value.

3. In some circumstances, the lessor is not an independent company but rather a separate business partnership, called a special-purpose entity (SPE), which is created by the lessor for the sole purpose of obtaining the lease.

4. In a direct lease, the lessor is the manufacturer (or a primary dealer) of the asset.

5. By offering assets together with complementary services, lessors can achieve efficiency gains and offer attractive lease rates.

Answer rating: 100% (QA)

The detailed answer for the above question is provided below 1 ... View the full answer