Briefly explain two disadvantages of sale and leaseback transactions

Q: In a sale-leaseback transaction the owner of an asset sells it and immediately leases it back from…

A: Sale-Leaseback approach: In the sale-leaseback approach, the owner of the leased asset sells it and…

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: leasing

A: Introduction: Leasing is defined as an agreement between two parties known as lessor & lessee…

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: Why is the cost of financing with a sale-leaseback essentially the same as the return from…

A: Introduction: Financing costs are nothing but the interest and other costs that the company incurred…

Q: one of the following is not a primary disadvantage of leasing from the lessee perspective is the:

A: Lease can be defined as the contractual arrangement calling for the lessee to pay the lessor for the…

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: Explain how the lower of cost and net realizable value rule is applied to purchase commitments.

A: Purchase Commitments: It refers to the commitments or contract made by a company with its suppliers…

Q: Define the term net advantage to leasing (NAL).

A: NAL It is the money that an entity or an individual saves from taking an asset on lease instead of…

Q: Which of the following should be avoided in a contract if cost certainty is important?…

A: Several options have been proposed as the clause that should be avoided in a contract if cost…

Q: What contingencies are commonly found in permanent or take-out loan commitments? Why are they used?…

A: The contingencies found in permanent or take-out loan commitments and their use are as follows: A…

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: Why do we need to differentiate lessor accounting for direct financing lease and sales-type lease?

A: Lease contract: Lease contract is an arrangement occurs between two individuals or entities through…

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: What are the disadvantages of lease?

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

Q: Explain Effective Cost of the Sale-Leaseback?

A: Sales leaseback is a type of financial transaction where the owner sold its property to the other…

Q: Define sale-and-leaseback

A: sale-and-leaseback

Q: What is net advantage to leasing (NAL)?

A: Leasing refers to an agreement between two parties to use asset of one by other in exchange of some…

Q: Is leasing a zero sum game in the sense that any gain to the lessee is a cost to the lessor? If…

A: The question is based on the concept of leasing.

Q: Explain why sunk costs are not considered in the analysis ofinvestment alternatives.

A: A sunk cost is also known as the retrospective cost, is a cost that cannot be recovered because it…

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 are the key advantages and disadvantages of leasing?

A: Leasing:Leasing is a contractual agreement between the lessor and lessee for hiring of a particular…

Q: How does Leasing offer flexibility and a lower cost when disposing of the asset?

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

Q: What is the main purpose of loan loss provisioning? Explain the concepts of incurred loss model and…

A: The loan loss provision is the cash reserve created by the banks for the future credit risk. The…

Q: Describe some economic factors that might provide an advantageto leasing.

A: Before we discuss the economic factors favoring leasing, let's understand the meaning of leasing. As…

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: Which of the following scenarios regarding a sale and leaseback transaction would result to a loss…

A: If fair value is less than the carrying amount of the asset then the loss on sale back should be…