Question

A company sells an office building that has appreciated in value and subsequently leases the space. Which of the following scenarios represents an impact that sale-leasebacks may have on corporate financial statements?
(A) Lower total income will be realized in the year of sale because of capital gains tax
(B) Higher taxable income will be realized in the year of sale because of a gain on sale
(C) Earnings per share increases because the mortgage has been paid off
(D) Higher taxable income will be realized because lease payments cannot be deducted

Answer

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