By entering into a lease,the lessee incurs an opportunity cost equal to the foregone CCA tax shield provided by the CCA of the asset.

Question

Quizplus · Accepted Answer

When a lessee enters into a lease, they do not own the asset and therefore cannot claim the capital cost allowance (CCA) tax shield that would be available to the owner of the asset. This results in an opportunity cost for the lessee, as they are foregone the tax benefits associated with owning the asset.

By Entering into a Lease,the Lessee Incurs an Opportunity Cost