The lessor capitalizes and amortizes initial direct costs for all types of leases except
A) sales-type leases.
B) operating leases.
C) direct-financing leases.
D) There are no exceptions.

Question

Quizplus · Accepted Answer

In sales-type leases, the lessor recognizes initial direct costs as an expense at the commencement of the lease, rather than capitalizing and amortizing them.

The Lessor Capitalizes and Amortizes Initial Direct Costs for All