Executory costs of a lease are treated by the lessee as
A)capitalized costs of the lease.
B)additional interest expense.
C)operating expenses.
D)deferred revenue.

Question

Quizplus · Accepted Answer

Executory costs of a lease, which include expenses such as insurance, property taxes, and maintenance, are treated as operating expenses by the lessee and are included in the calculation of total lease payments. These costs are not considered part of the actual lease payment or interest expense, and therefore cannot be capitalized or deferred.

Executory Costs of a Lease Are Treated by the Lessee