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.

---

Definitions:

Profit

The financial gain that results when the revenues generated from business activities exceed the expenses, taxes, and costs incurred.

Competitive Market

A market structure characterized by many buyers and sellers, where all entities have little to no power to influence prices or market conditions.

Transaction Costs

Transaction costs are expenses incurred when buying or selling goods or services, including the costs of searching for information, negotiations, and enforcement of contracts.

Spread

The difference between two values, such as the bid and ask prices in financial markets, or the range in statistical data.