Multiple Choice
If the asset described in above Question had a CCA rate of 30%, with the usual half-year rule, and were leased for 5 years, how would the lessee treat the five years of CCA? The lessee tax rate is 40%.The asset class uses declining balance.
A) lessee would calculate the CCA amounts for each of the five years, apply the tax rate against these amounts, and show these amounts as cash outflows.
B) lessee would calculate the CCA amounts for the entire life of the asset, and show those amounts as cash flows.
C) lessee would ignore the CCA, since it is the lessor's financial province.
D) lessee would treat the CCA calculations for each of the five years of the lease as cash inflows for the lessor.
Correct Answer:
Verified
Correct Answer:
Verified
Q100: As a practical matter, the lessee uses
Q101: Simpson is considering leasing a $500,000
Q102: A sensible, not dubious, reason for a
Q103: A lessor and lessee are most able
Q104: A sale and leaseback arrangement transfers ownership
Q106: If an asset had a $20,000 salvage
Q107: All of the following must be included
Q108: Because salvage value is a more risky
Q109: A financial lease has the following characteristics:
Q110: The most important issue that makes it