Equipment Acquisition & Disposal Flashcards

Which type of equipment acquisition agreement transfers ownership to the buyer at the end of the contract term for a nominal fee?

Answer: Capital lease (finance lease)

A capital lease is structured so the lessee assumes substantially all ownership risks and rewards, with title transferring at lease end.

An exhibition company discovers that a competitor is selling used truss systems at auction. Before bidding, what is the most critical due diligence step?

Answer: Obtain and review the maintenance and inspection records

Maintenance and inspection history reveals structural integrity, prior damage repairs, and compliance with safety standards for rigging equipment.

Under the Uniform Commercial Code (UCC), risk of loss for shipped equipment typically transfers to the buyer when?

Answer: The seller ships the goods (FOB shipping point)

Under FOB shipping point terms, risk of loss passes to the buyer once the seller delivers goods to the carrier.

Which environmental regulation most directly affects the disposal of fluorescent lighting used in exhibition displays in the U.S.?

Answer: EPA Universal Waste Rule

The EPA Universal Waste Rule governs disposal of mercury-containing lamps including fluorescents, requiring proper recycling or disposal.

What is a 'blanket purchase order' and how does it benefit exhibition equipment procurement?

Answer: A standing agreement allowing repeated orders from a vendor at pre-negotiated prices

Blanket POs lock in pricing and terms for a set period, reducing administrative burden and ensuring supply availability for recurring equipment needs.

When preparing a capital budget request for new digital signage equipment, which supporting document best justifies the expenditure to senior management?

Answer: Cost-benefit analysis comparing current vs. proposed solution

A cost-benefit analysis quantifies financial and operational gains against investment cost, providing management with objective justification.

A trade show manager sells obsolete booth components to a competitor. Which tax implication may arise if the sale price exceeds the asset's book value?

Answer: Capital gains or ordinary income recognition

Selling a depreciated asset above its book value triggers a gain that may be taxed as ordinary income (depreciation recapture) or capital gain depending on holding period.