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Lessee would claim lower amounts of cca

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Doris Doll Co. (DDC) is considering either leasing or buying a new machine. Which of the following circumstances presents a potential disadvantage of leasing, making it the more expensive alternative for DDC?

a The lessor's risk is lower, and therefore the implied interest rate in the lease is lower, than the interest rate charged by the bank, and thus the lease payments are lower.

b The lessee would claim lower amounts of CCA on the machine than the lessor if the machine is purchased.

c The lessor has cost advantages not available to the lessee and may be able to provide maintenance at a lower cost.

d The lessor may restrict how the asset is used by the lessee.

Reference no: EM132530976

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