CIPS L4M3 Exam - Topic 8 Question 28 Discussion

Actual exam question for CIPS's L4M3 exam

Question #: 28
Topic #: 8

[All L4M3 Questions]

Which of the following statements is FALSE on contracts for the leasing of assets?

AThe party responsible for maintenance, insurance and taxes is subject to negotiation

BIn lease agreement, the possession and right of use of an asset are transferred to the lessee

CThe ownership of leased asset is transferred to the lessee at the end of the period

DThe lessee may bear some risks of ownership, such as the liability to insure the asset

Show Suggested Answer

Suggested Answer: C

A lease is a contractual arrangement calling for the lessee (user) to pay the lessor (owner) for use of an asset. Some characteristics of Leases are:

- The right to use the lessor's asset is granted in exchange for a fee called the lease payment.

- The lease payments are usually paid in installments.

- Leases may be long- or short-term.

- At its inception a lease agreement constitutes a mutually unperformed contract

Though the ownership of the asset is not transferred to the lessee, some responsibilities and risks do. The lessor and lessee may negotiate on who is responsible on maintenance, insurance, etc.

LO 1, AC 1.3

by Rory at Feb 12, 2024, 10:09 AM

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Tori

3 months ago

I thought ownership transferred at the end, but C seems wrong now.

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Eric

3 months ago

D makes sense, lessees do take on some risks.

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Isabelle

3 months ago

Wait, C sounds off. Lessees don’t get ownership, right?

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Frank

4 months ago

Totally agree, B is spot on!

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Arlette

4 months ago

A is true, maintenance can be negotiated.

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Francis

4 months ago

I’m leaning towards C being false too, but I could be mixing it up with purchase agreements.

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Kasandra

4 months ago

I practiced a similar question, and I feel like the lessee does take on some risks, so D seems true to me.

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German

4 months ago

I'm not entirely sure, but I remember something about maintenance being negotiable, so maybe A is the false one?

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Annabelle

5 months ago

I think option C is the one that sounds false because ownership usually doesn't transfer in a lease.

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Rana

5 months ago

Okay, let me think this through step-by-step. The key is to identify which statement is false about the leasing of assets. I'll go through each option carefully.

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Rosamond

5 months ago

Hmm, I'm a bit unsure about this one. The wording is a bit tricky, and I want to make sure I fully understand the differences between the options before selecting an answer.

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Becky

5 months ago

This question seems pretty straightforward. I think I can eliminate a few options based on my understanding of lease agreements.

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Galen

5 months ago

I've got a good handle on the basics of lease agreements, so I'm feeling confident about this one. I'll read through the options and select the one that doesn't align with my knowledge.

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Alecia

5 months ago

An SQS queue as the on-failure destination sounds like a solid solution. That way, any failed messages can be retried from the queue, and the Lambda function can process them asynchronously.

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Gennie

5 months ago

Hmm, I'm a bit unsure about the sequencing and stock adjustment options. I'll need to review those details in the notes.

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Marla

5 months ago

Hmm, this looks like a tricky one. I'll need to carefully read through the options and think about which methods are used to initiate discovery on a service.

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