All of the Following Are Benefits of Leasing Except

question 55

Multiple Choice

All of the following are benefits of leasing except:

• A) They have the ability to shift the tax benefits from depreciation and other deductions from a lessee that has little or no taxable income to a lessor that has substantial taxable income.
• B) They provide flexibility to change capacity as needed without having to purchase or sell assets.
• C) They have the ability to reduce the risk of technological obsolescence, relative to outright ownership, by maintaining the flexibility to shift to technologically more advanced assets.
• D) In an operating lease, the lessee recognizes the signing of the lease as the simultaneous acquisition of a long-term asset and the incurring of a long-term liability for lease payments.

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Definitions:

Cash Account

An account that records all transactions involving cash inflows and outflows within a company.

Accounting Equation

The foundational formula in accounting representing assets equal to the sum of liabilities and shareholders' equity.

Initial Investment

The initial amount of money spent to start a project, purchase an asset, or invest in a business venture.

Accounting Equation

The foundational principle of accounting that states assets equal liabilities plus equity.