Under ASPE, a lease in which the lessor wants to include a profit in the rental amount as well as the asset cost is called a
A) sales-type lease.
B) manufacturer lease.
C) direct financing lease.
D) finance lease.

Question

Quizplus · Accepted Answer

Under ASPE, a lease in which the lessor wants to include a profit in the rental amount as well as the asset cost is called a sales-type lease. In a sales-type lease, the lessor finances the purchase of the leased asset and recognizes revenue at the inception of the lease equal to the present value of the lease payments plus the profit margin. This type of lease is typically used by manufacturers and dealers to increase their sales by offering financing to customers.

Under ASPE, a Lease in Which the Lessor Wants to Include