What question did this study set out to answer?

The aim is to explore how implicit interest rates and depreciation methods affect lease versus buy decisions.

March 18, 2026The Accounting Review

Implicit Factors in the Evaluation of Lease vs. Buy Alternatives.

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Authors

LCLanny G. ChasteenOklahoma State University Oklahoma City

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Implication

This analysis demonstrates how implicit interest rates and tax effects influence lease versus buy choices, suggesting significant financial implications.

Key Points

The aim is to explore how implicit interest rates and depreciation methods affect lease versus buy decisions.
Defined the context of lease as a financial lease similar to long-term debt.
Examined the tax implications of lease payments versus depreciation costs of purchased assets.
Analyzed the relationship between implicit interest rates in leases and the firm's borrowing rate.
If the implicit interest rate in the lease is higher than the borrowing rate, buying is preferred.
Lease payments provide tax deductions that differ from depreciation, impacting overall cost calculation.
Financial decisions made under these considerations have significant implications for cost management.

Cite This Study

Lanny G. Chasteen (1973) studied this question.

synapsesocial.com/papers/69ba43f74e9516ffd37a5be1 https://doi.org/10.2308/tar-4482480

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Implication

This analysis demonstrates how implicit interest rates and tax effects influence lease versus buy choices, suggesting significant financial implications.

Implicit Factors in the Evaluation of Lease vs. Buy Alternatives.

Discussion

Member takes

Implication

Key Points

Cite This Study

Implicit Factors in the Evaluation of Lease vs. Buy Alternatives.

Discussion

Member takes

Implication

Key Points

Cite This Study

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