Which statement best describes the purpose/intent of the lease agreement?

• A. Lessor intends to purchase ownership immediately
• B. Lessee pays rent for possession and use; transaction is a lease, not a loan
• C. Borrower obtains credit line
• D. Equipment becomes property of lessee after payment

Answer: (B)

A lease is an arrangement that gives the lessee the right to possess and use an asset for a period in exchange for rent, while ownership stays with the lessor. That core idea explains why the statement describing the transaction as a lease, not a loan, is the best fit: it centers on using the asset rather than on borrowing money or transferring ownership.

The other scenarios describe different financial setups. Saying the lessor intends to acquire ownership immediately describes a sale rather than a lease. Describing a borrower obtaining a credit line refers to a line of credit, not to leasing an asset. Saying the equipment becomes the lessee’s property after payment aligns with a purchase arrangement, which is not the standard lease purpose.