Which of the following statements is FALSE?
A)Lease payments are a fixed obligation of the firm.
B)The risk of the lease payments is no greater than the risk of secured debt,so it is reasonable to discount the lease payments at the firm's secured borrowing rate.
C)If a firm purchases a piece of equipment,the expense is a capital expenditure.Therefore,the purchase price can be depreciated over time,generating a depreciation tax shield.
D)If the equipment is leased and the lease is a non-tax lease,there is no capital expenditure,but the lease payments are an operating expense.

Question

Quizplus · Accepted Answer

In a non-tax lease, the lease payments are not considered operating expenses for tax purposes, and the lessee cannot deduct them as such.

Which of the Following Statements Is FALSE