Which of the following is not an advantage of an operating lease?
A)Reduced risk of obsolescence
B)100-percent financing
C)Income tax advantages
D)Accelerated depreciation

Question

Quizplus · Accepted Answer

Accelerated depreciation is actually an advantage of a capital lease, not an operating lease. With a capital lease, the lessee can take advantage of the tax benefits of depreciation since the lease is treated like an asset purchase. However, with an operating lease, the lessor retains ownership of the asset, so the lessee cannot depreciate it. The advantages of an operating lease include reduced risk of obsolescence, 100-percent financing, and income tax advantages such as being able to deduct lease payments as operating expenses.

Which of the Following Is Not an Advantage of an Operating