In a discounting arrangement, which statement about who remains as lessor of record is true?

In a discounting arrangement, which statement about who remains as lessor of record is true?

• A. The original lessor ceases to be the owner
• B. The lessee becomes the owner
• C. The original lessor remains lessor of records and ultimately responsible
• D. The funding source becomes the lessor

Answer: (C)

In a discounting arrangement, the funding source buys the right to receive the lease payments from the original lessor, but the lease with the lessee remains in the name of the original lessor. The original lessor stays as the lessor of record and bears the ultimate responsibility for fulfilling the lease terms and servicing the contract, including any related obligations to the lessee. The funding source provides cash upfront and simply collects the payments as they come in, without becoming the lessor or taking ownership of the asset. So, the correct view is that the original lessor remains lessor of records and ultimately responsible because ownership of the lease contract and the servicing duties stay with the original lessor, while the funding source merely finances the receivables. The other scenarios would imply transferring ownership, changing the lease party, or making the funding source the lessor, which isn’t how discounting is structured.

In a discounting arrangement, the funding source buys the right to receive the lease payments from the original lessor, but the lease with the lessee remains in the name of the original lessor. The original lessor stays as the lessor of record and bears the ultimate responsibility for fulfilling the lease terms and servicing the contract, including any related obligations to the lessee. The funding source provides cash upfront and simply collects the payments as they come in, without becoming the lessor or taking ownership of the asset.

So, the correct view is that the original lessor remains lessor of records and ultimately responsible because ownership of the lease contract and the servicing duties stay with the original lessor, while the funding source merely finances the receivables. The other scenarios would imply transferring ownership, changing the lease party, or making the funding source the lessor, which isn’t how discounting is structured.