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Answer: typically require minimal or no initial down payment.
**Explanation:** Leasing an asset offers several advantages over purchasing, one of which is the reduced need for upfront cash. Lease agreements generally require little to no down payment, making them an attractive option for lessees. This aligns with the correct answer, **A**. - **Option B** is incorrect because under IFRS, leases are no longer classified as off-balance sheet financing. Lessees must recognize a lease liability and a right-of-use (ROU) asset at the inception of the lease. - **Option C** is also incorrect because IFRS mandates the recognition of a lease liability on the balance sheet for both finance and operating leases, except for short-term leases (12 months or less) or leases of low-value assets (up to $5,000 under IFRS).
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Which of the following is a potential motivation for a lessee to lease a high-value, long-lived asset instead of purchasing it? Lease contracts:
A
typically require minimal or no initial down payment.
B
are classified as off-balance sheet financing arrangements.
C
do not necessitate the recording of a liability on the balance sheet.