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 matched with the interest revenues they help generate in
A)an operating lease.
B)a capital lease.
C)a direct financing lease.
D)a sales-type lease.

Question

Quizplus · Accepted Answer

In a direct financing lease, initial direct costs are deferred and amortized over the lease term, matching them with the interest revenue generated from the lease.

Costs Incurred by the Lessor That Are Associated Directly with Originating