Costs incurred by the lessor that are associated directly with originating a lease and are essential to acquire that lease are called initial direct costs. Initial direct costs are recorded as assets and amortized over the term of the lease in
A)an operating lease.
B)a capital lease.
C)a direct financing lease.
D)a sales-type lease.

Question

Quizplus · Accepted Answer

In an operating lease, initial direct costs are recorded as assets and amortized over the lease term. In capital leases, direct financing leases, and sales-type leases, these costs are typically expensed or included in the net investment in the lease.

Costs Incurred by the Lessor That Are Associated Directly with Originating