If an Asset Has a Positive Salvage of $1,000, Exactly

question 3

Multiple Choice

If an asset has a positive salvage of $1,000, exactly equal to UCC, then the lease analysis for an asset alone in its pool will show the following cash flows for that phenomenon.

• A)The salvage is a cost to leasing; there is no terminal loss or gain
• B)The salvage is a cost of owning, the terminal loss is $1,000
• C)Salvage has no effect on leasing, since it belongs to the owner
• D)The tax shelter for the terminal gain will be $1,000

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