The lessor recognizes a profit at the inception of the lease when the lease is classified as a(n):
A)sales-type lease.
B)direct financing lease.
C)non-finance lease.
D)operating lease.

Question

Quizplus · Accepted Answer

In a sales-type lease, the lessor recognizes a profit at the inception of the lease because it is considered a sale of the underlying asset. This is distinct from other types of leases where profit recognition is deferred or occurs over the lease term.

The Lessor Recognizes a Profit at the Inception of the Lease