Which of the following statements is/are true? i. Tax-shield on depreciation and interest is an important variable both for the lessor and the lessee. ii. Lease transactions in India are governed by the Lease Act. iii. A lessee should evaluate the lease options against the buying option. iv. As per AS-19, financial lease is shown in the balance sheet of the lessee as an asset.

The correct answer is: A. i and iv

Statement i is true because tax-shield on depreciation and interest is an important variable both for the lessor and the lessee. The lessor can claim depreciation on the leased asset, which reduces its taxable income. The lessee can claim interest expense on the lease, which reduces its taxable income.

Statement ii is false because lease transactions in India are governed by the Indian Contract Act, 1872.

Statement iii is true because a lessee should evaluate the lease options against the buying option to determine which option is more beneficial.

Statement iv is true because as per AS-19, financial lease is shown in the balance sheet of the lessee as an asset.

Here is a brief explanation of each option:

• Option i: Tax-shield on depreciation and interest is an important variable both for the lessor and the lessee. The lessor can claim depreciation on the leased asset, which reduces its taxable income. The lessee can claim interest expense on the lease, which reduces its taxable income.
• Option ii: Lease transactions in India are governed by the Lease Act. This is false because lease transactions in India are governed by the Indian Contract Act, 1872.
• Option iii: A lessee should evaluate the lease options against the buying option. This is true because a lessee should evaluate the lease options against the buying option to determine which option is more beneficial.
• Option iv: As per AS-19, financial lease is shown in the balance sheet of the lessee as an asset. This is true because as per AS-19, financial lease is shown in the balance sheet of the lessee as an asset.