Economics · Corporate Financial Management
A major advantage of Lease Finance for the Lessee is the ability to acquire assets without immediate capital outlay. Which statement provides the most significant long-term financial advantage from a tax perspective for the Lessee under an Operating Lease?
Verified Solution4 OptionsUpdated: October 2026👁️1 View
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- 1The lessee gains immediate legal title and ownership of the asset upon signing the lease agreement.
- 2It allows the lessee to claim a 100 percent tax deduction on the asset's original acquisition price in the first year.
- 3It completely eliminates the need for the lessee to obtain any form of bank financing for future operations.
- 4Lease rentals are fully deductible as an operating expense for tax purposes, resulting in a quicker and potentially larger write-off compared to ownership depreciation.✓
Correct answer
Lease rentals are fully deductible as an operating expense for tax purposes, resulting in a quicker and potentially larger write-off compared to ownership depreciation.
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