Which of the Following Statements Is FALSE

question 25

Multiple Choice

Which of the following statements is FALSE?

• A)For a lease to be attractive to both the lessee and the lessor,the gains must come from some underlying economic benefits that the leasing arrangement provides.
• B)With a true tax lease,the lessor replaces depreciation and interest tax deductions with a deduction for the lease payments.
• C)Generally speaking,if the asset's tax depreciation deductions are more rapid than its lease payments,a true tax lease is advantageous if the lessor is in a higher tax bracket than the lessee.
• D)A tax gain occurs if the lease shifts the more valuable deductions to the party with the higher tax rate.

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Definitions:

Standard Costs

Predetermined costs for materials, labor, and overhead that are used for budgeting and cost control purposes.

Raw Materials

The unprocessed natural materials or substances used in the initial stages of production or manufacturing.

Cost System

A method used to allocate costs to products, services, projects, or departments to facilitate financial analysis, budgeting, and managerial decision-making.

Gallons

A unit of volume measurement used primarily for liquids, commonly used in the United States.