Which of the following motivations are dubious reasons for leasing?
I.Leasing avoids capital expenditure controls.
II.Leasing preserves capital.
III.Leasing can make the firm's balance sheet and income statement look better by increasing book income or decreasing book assets or both.
IV.The alternative minimum tax is avoided.

Question

Quizplus · Accepted Answer

Options I, II, and III are all dubious reasons for leasing. Option IV (avoiding the alternative minimum tax) may be a legitimate reason for leasing depending on the specific circumstances of the firm.

Which of the Following Motivations Are Dubious Reasons for Leasing