If the lessor records unearned rent at the inception of a lease, then the lease must:
A)be a direct financing lease.
B)be an operating lease.
C)contain a bargain purchase option.
D)be an annuity due.

Question

Quizplus · Accepted Answer

Unearned rent is typically recorded in an operating lease because it represents payments received for future use of the property, which have not yet been earned by the lessor. In a direct financing or sales-type lease, the focus is on the interest income and the recovery of the cost of the leased asset, not on rental income.

If the Lessor Records Unearned Rent at the Inception of a Lease