For a sales-type lease, under ASC 842, the net investment is equal to
A) The present value of the minimum lease payments plus executor costs.
B) The net investment minus unearned income.
C) Sales minus the gross profit recognized on the sale.
D) The present value of the gross lease payments.

Question

Quizplus · Accepted Answer

Under ASC 842, the net investment in a sales-type lease is equal to the present value of the gross lease payments. This approach reflects the total amount to be received over the lease term, discounted to present value, which aligns with the standard's focus on recognizing assets and liabilities arising from leases on the balance sheet.

For a Sales-Type Lease, Under ASC 842, the Net Investment