The distinction between a direct-financing lease and a sales-type lease is the presence or absence of a transfer of title.

Question

Quizplus · Accepted Answer

The distinction between a direct-financing lease and a sales-type lease primarily lies in the presence or absence of manufacturer or dealer profit (or loss), not in the transfer of title. A sales-type lease involves profit or loss to the lessor due to the difference between the fair value of the leased asset and its cost, while a direct-financing lease does not involve such profit or loss.

The Distinction Between a Direct-Financing Lease and a Sales-Type Lease