Financial leasing is only justified by one of the following arguments.
A)The lessor can make better use of CCA tax shields than can a lessee
B)Leasing allows financial officers to more easily hide capital expenditures
C)Leasing allows one to get access to an asset with no money down
D)Such leases need not appear on the balance sheet as capitalized items

Question

Quizplus · Accepted Answer

Financial leasing can be justified if the lessor can make better use of capital cost allowance (CCA) tax shields than the lessee. This is because the lessor can claim tax deductions on the asset's depreciation and interest payments while the lessee cannot claim as much due to tax rules around capital assets.

Financial Leasing Is Only Justified by One of the Following