If the lessor records unearned rent at the inception of a lease,then the lease must:

Question

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Unearned rent is recorded at the inception of an operating lease. This is because operating leases do not transfer ownership of the leased asset to the lessee, and the lessor expects to continue to earn rent over the lease term. Direct financing leases, on the other hand, do not involve unearned rent because the lessor has already earned the interest income on the lease receivable at inception. Bargain purchase options and annuity due payment structures are not relevant to the recording of unearned rent.

If the Lessor Records Unearned Rent at the Inception of a Lease,then