Response to the following problem:
Bradley Co. is expanding its operations and is in the process of selecting the method of financing this program. After some investigation, the company determines that it may (1) issue bonds and with the proceeds purchase the needed assets or (2) lease the assets on a long-term basis.
Without knowing the comparative costs involved, answer these questions:
(a) What might be the advantages of leasing the assets instead of owning them?
(b) What might be the disadvantages of leasing the assets instead of owning them?
(c) In what way will the balance sheet be differently affected by leasing the assets as opposed to issuing bonds and purchasing the assets?