A Vehicle Lease Has Several Costs

question 34

Multiple Choice

A vehicle lease has several costs.Which of the following is the amount paid monthly?

• A) Capitalized cost
• B) Money factor
• C) Payment amount
• D) Residual value
• E) Trade-in value

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Definitions:

MACRS

Modified Accelerated Cost Recovery System, a method of depreciation for tax purposes that allows faster depreciation in the initial years of an asset's life.

Equipment

Tangible assets used in operations, such as machinery or computers, that have a useful life beyond one accounting period.

MACRS

Modified Accelerated Cost Recovery System, a method of depreciation in the United States that allows businesses to recover investments in certain property through tax deductions over a specified life.

Scrap Value

The estimated value that an asset will realize upon its sale at the end of its useful life; often used in depreciation calculations.