A sales type lease is similar to a direct financing lease, but the lessor sells the asset and records a receivable. It differs in that its cost or carrying value is less than the fair value of the asset which results in a profit or loss for the manufacturer or dealer.

Question

Quizplus · Accepted Answer

A sales type lease does involve the sale of the asset by the lessor and the recording of a receivable, and it does typically result in a profit or loss for the manufacturer or dealer due to the difference between the carrying value and fair value of the asset.

A Sales Type Lease Is Similar to a Direct Financing