Q.A lease that runs for most of an asset's useful life, is generally non-cancellable, and transfers substantially all the risks and rewards of ownership to the lessee is called:

The key test for a financial lease is that it substantially shifts the economic risks and rewards of ownership onto the lessee, even without transferring legal title. …

Leases are distinguished mainly by their duration, cancellability, and which party effectively bears the risks and rewards of the asset's ownership.

Option (a), an operating lease, is incorrect because that type of lease is comparatively short-term and cancellable, with the lessor continuing to bear the risks of maintenance and obsolescence — the opposite of what the question describes. Options (c) and (d), a rental agreement and a hire-purchase agreement, are incorrect because neither is the specific term the chapter uses for a long-term, non-cancellable lease that transfers ownership-like risk while legal title remains with the lessor; hire-purchase, in particular, is a distinct arrangement in which the buyer eventually acquires legal ownership through instalments, unlike a lease. …

Confusing this with an operating lease, where the lessor keeps bearing maintenance and obsolescence r …