Question

The primary disadvantage of leasing is that:

a. it is difficult to replace leased assets than it is to replace owned assets.
b. the responsibility of disposing of obsolete assets lies on the lessee.
c. it usually costs more than it would cost to purchase an asset.
d. the process of negotiating and closing a lease is very complicated.

Answer 1

Answer: Option C

Explanation: In simple words, lease refers to a contract under which an individual gets to use the asset of some other person in return he or she pays the owner a fixed payment or a series of regular payments.

There is no problem in replacing the leased asset as these things are fixed in before making the contract but the person willing to use the asset has to pay more money than the actual cost of that asset.