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 expensed at the inception 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 a sales-type lease, initial direct costs are expensed at the inception of the lease because the lessor recognizes a profit or loss on the sale of the leased asset.

Costs Incurred by the Lessor That Are Associated Directly with Originating