For a(n) ________ lease, a lessor recognizes revenue on the sale and records the asset, ________ lease. It also removes the leased asset from its accounts and records the ________.
A) sales-type; finance; revenue
B) operating; net investment in lease-sales-type; cost of goods sold
C) finance; gross investment in lease-sales-type; cost of goods sold
D) sales-type; net investment in lease-sales-type; cost of goods sold

Question

Quizplus · Accepted Answer

In a sales-type lease, the lessor recognizes revenue and records the net investment in the lease. The leased asset is removed from the accounts, and the cost of goods sold is recorded.

For A(n) ________ Lease, a Lessor Recognizes Revenue on the Sale