What are the three types of period costs that a lessee experiences with capital leases?
A) Interest expense,amortization expense,executory costs
B) Amortization expense,executory costs,lease expense
C) Executory costs,interest expense,lease expense
D) Lease expense,executory costs,initial costs

Question

Quizplus · Accepted Answer

The three types of period costs that a lessee experiences with capital leases are interest expense (associated with the lease liability), amortization expense (associated with the leased asset), and executory costs (such as insurance and maintenance). Choice A correctly identifies these three types of costs. Choice B incorrectly includes lease expense, which is not a distinct category of cost in this context. Choice C also incorrectly includes lease expense and leaves out amortization expense. Choice D incorrectly identifies initial costs as a period cost, but they are actually capitalized and amortized over the lease term.

What Are the Three Types of Period Costs That a Lessee