How Is the Effect of a Recapture Calculated in a Lease-Or-Purchase

question 50

Multiple Choice

How is the effect of a recapture calculated in a lease-or-purchase analysis?

• A) Recapture x CCA rate
• B) Recapture x discount rate
• C) Recapture x cost of borrowing rate
• D) Recapture x tax rate

---

Definitions:

Relative Sales Value Method

A method used to allocate joint costs based on the relative sales value of the products produced from the same process or operation.

Allocated

The distribution of resources, costs, or expenses to specific departments, projects, or cost centers according to a predetermined method.

Constant Gross Margin Method

An inventory valuation method that maintains a fixed gross margin percentage for costing inventory despite changes in the cost of goods sold.

Joint Cost

The costs incurred in producing products up to a split-off point in a process that yields multiple products, typically allocated among the products based on some reasonable method.