CFA Practice Question

There are 233 practice questions for this study session.

CFA Practice Question

If a board member leases a company airplane for free personal use, it is an indication of ______.
A. related-party transactions
B. personal use of company assets
C. inappropriate executive compensation
Explanation: On the other hand, if a board member leases his or her own airplane to the company, it will be considered a related-party transaction.

User Contributed Comments 9

User Comment
ThePessimist The question says "free personal use," implying that the Board Member isn't paying for this "lease." So it's not really a transaction at all, is it?
volkovv it means that the Board member is taking it as an excessive perquisite, which is a sign of personal use of company's assets
jamyandy Personal use of the company's resources is not necessarily a breach of policy. What if the use of the jet was incorporated in the Executive's compensation package?
sheenalim what if the personal use of the asset wasn't free?
MUTE If it is not free, it will be called rental, not "use" which implies free.
Joel1980 Can you lease something for free?
dream007 @ Joel...He leases the plane implies he leased it on behalf of the company so that he can use it for his own personal use (free personal use).
gill15 You're making it complicated. You cant use anything from work for personal use and it doesnt matter if you pay for it.
111hal111 Surely this is an EXAMPLE of personal use of company assets, not an indication and rather it is an INDICATION of C
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