Which of the following statements about a terminal loss is correct?
A) In a lease-or-purchase analysis, a terminal loss will be a benefit of leasing
B) In a lease-or-purchase analysis, a terminal loss will be a benefit of both purchasing and leasing
C) In a lease-or-purchase analysis, a terminal loss will be a benefit of neither purchasing nor leasing
D) In a lease-or-purchase analysis, a terminal loss will be a benefit of purchasing

Question

Quizplus · Accepted Answer

In a lease-or-purchase analysis, a terminal loss will be a benefit of purchasing. A terminal loss occurs when the residual value of an asset is less than its book value at the end of its useful life. Purchasing a fixed asset allows the company to claim a terminal loss as a tax deduction, which can help reduce the overall cost of acquiring the asset. However, leasing does not offer this benefit as the ownership of the asset remains with the lessor.

Which of the Following Statements About a Terminal Loss Is