In an EFA arrangement, indebtedness is attributed to whom?

• A. The borrower, not the lessee
• B. The lessee
• C. The lessor
• D. A financial guarantor

Answer: (A)

In an EFA arrangement, the party that actually borrows the funds to acquire the asset carries the debt. The lessee simply gains the right to use the asset and makes the lease-like payments, but does not record the financing as its own indebtedness. The lessor remains the asset owner, and a financial guarantor only provides backing, not the primary debt. So the economic burden and accounting for the debt sit with the borrower, not the lessee.