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Exam IIA-CIA-Part3 All Questions

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Exam IIA-CIA-Part3 topic 2 question 51 discussion

Actual exam question from IIA's IIA-CIA-Part3
Question #: 51
Topic #: 2
[All IIA-CIA-Part3 Questions]

Which of the following best explains why an organization would enter into a capital lease contract?

  • A. To increase the ability to borrow additional funds from creditors.
  • B. To reduce the organization's free cash flow from operations.
  • C. To improve the organization's free cash flow from operations.
  • D. To acquire the asset at the end of the lease period at a price lower than the fair market value.
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Suggested Answer: D 🗳️

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Elvoo
1 month ago
Selected Answer: C
I think as well C, anyone disagree?
upvoted 1 times
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emtofid
2 months, 1 week ago
Selected Answer: C
Not all capital leases guarantee a bargain purchase option Primary objective is asset use and financial management: Organizations prioritize gaining access to the asset and structuring payments to fit cash flow needs. The potential to acquire the asset cheaply at the end is secondary.
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