Discuss CIPS L4M3 Exam Topic 8 Question 28

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

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

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22 comments · newest first

Tori 11 months ago

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

Eric 11 months ago

D makes sense, lessees do take on some risks.

Isabelle 12 months ago

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

Frank 12 months ago

Totally agree, B is spot on!

Arlette 1 year ago

A is true, maintenance can be negotiated.

Francis 1 year ago

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

Kasandra 1 year ago

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

German 1 year ago

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

Annabelle 1 year ago

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

Rana 1 year 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.

Rosamond 1 year 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.

Becky 1 year ago

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

Galen 1 year 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.

Alecia 1 year 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.

Gennie 1 year ago

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

Marla 1 year 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.

Leontine 1 year ago

I'm pretty sure that not-for-profits focus on resource utilization and providing value for money, but I'm a bit unsure about the third option.

Dolores 2 years ago

I think D is the false statement because the lessee is not usually responsible for insuring the asset

Garry 2 years ago

I agree with Paola, C seems like the false statement

Paola 2 years ago

But C makes sense because ownership is usually not transferred

Julio 2 years ago

No, I believe the answer is D

Paola 3 years ago

I think the answer is C

CIPS L4M3 Exam - Topic 8 Question 28 Discussion