If the asset described in above Question had a CCA rate of 30%, with the usual half-year rule, and were leased for 5 years, how would the lessee treat the five years of CCA? The lessee tax rate is 40%. The asset class uses declining balance.

Multiple Choice

• A.lessee would calculate the CCA amounts for each of the five years, apply the tax rate against these amounts, and show these amounts as cash outflows.

• B.lessee would calculate the CCA amounts for the entire life of the asset, and show those amounts as cash flows.

• C.lessee would ignore the CCA, since it is the lessor's financial province.

• D.lessee would treat the CCA calculations for each of the five years of the lease as cash inflows for the lessor.