What is the impact on the lease payment charged by lessor if the asset qualifies for the investment tax credit (ITC)?
A) Increase payment
B) Cannot be determined
C) Decrease payment
D) No impact

Question

Quizplus · Accepted Answer

If the asset qualifies for the investment tax credit (ITC), the lessor can reduce the lease payment. This is because the lessor can apply the tax credit towards the purchase price of the asset, which reduces their overall cost. As a result, they can offer a lower lease payment to the lessee while still earning a profit.

What Is the Impact on the Lease Payment Charged by Lessor