Which of the Following Motivations Are Dubious Reasons for Leasing

question 34

Multiple Choice

Which of the following motivations are dubious reasons for leasing?

• A)Leasing avoids capital expenditure controls, and leasing preserves capital.
• B)Leasing avoids capital expenditure controls, leasing preserves capital, and leasing can make the firm's balance sheet and income statement look better by increasing book income or decreasing book assets or both.
• C)Leasing avoids capital expenditure controls, leasing preserves capital, leasing can make the firm's balance sheet and income statement look better by increasing book income or decreasing book assets or both, and the alternative minimum tax is avoided.
• D)Leasing avoids capital expenditure controls, leasing preserves capital, and the alternative minimum tax is avoided.

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Definitions:

Indirect Labor Costs

Costs related to labor that cannot be directly tied to the production of specific goods or services, such as maintenance personnel or supervisors.

Activity-based Costing

An accounting method that assigns costs to products based on the activities involved in manufacturing or providing a service.

Indirect Costs

Expenses related to the general operation of a business that cannot be directly attributed to a specific project or activity.

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