In a full payout lease, which costs does the lessee typically pay?

In a full payout lease, which costs does the lessee typically pay?

• A. Only periodic payments with no additional costs
• B. The full purchase price plus interest, maintenance, insurance and administration costs
• C. Only the purchase price with no interest
• D. Maintenance costs only

Answer: (B)

In a full payout lease, the lessee ends up bearing the overall cost of obtaining and using the asset. The regular payments are structured to cover not only the asset’s depreciation but also the financing charge (interest). In addition, the lessee typically handles ongoing costs such as maintenance, insurance, and administration. That combination means the lessee effectively pays the full purchase price plus interest and the ongoing costs, which aligns with the option stating the full purchase price plus interest, maintenance, insurance and administration costs. The other options miss one or more of these components, such as excluding interest, excluding the asset price, or limiting costs to maintenance alone.

In a full payout lease, the lessee ends up bearing the overall cost of obtaining and using the asset. The regular payments are structured to cover not only the asset’s depreciation but also the financing charge (interest). In addition, the lessee typically handles ongoing costs such as maintenance, insurance, and administration. That combination means the lessee effectively pays the full purchase price plus interest and the ongoing costs, which aligns with the option stating the full purchase price plus interest, maintenance, insurance and administration costs. The other options miss one or more of these components, such as excluding interest, excluding the asset price, or limiting costs to maintenance alone.