What are the three types of period costs that a lessee experiences with finance leases?
A)Executory costs, finance expense, and lease expense.
B)Depreciation expense, executory costs, and lease expense.
C)Finance expense, depreciation expense, and executory costs.
D)Lease expense, finance expense, and depreciation expense.

Question

Quizplus · Accepted Answer

Finance expense, depreciation expense, and executory costs are the three types of period costs a lessee experiences with finance leases. Finance expense relates to the interest component of the lease payments, depreciation expense is recognized for the right-of-use asset over the lease term, and executory costs are additional expenses such as maintenance and taxes not included in the lease payments.

What Are the Three Types of Period Costs That a Lessee