The costs that (a) are associated directly with consummating a lease, (b) are essential to acquire the lease and (c) would not have been incurred had the lease agreement not occurred are referred to as initial direct costs. Initial direct costs are deferred and expensed over the lease term, generally on a straight-line basis in:
A) A sales-type lease with a selling profit.
B) A sales-type lease without a selling profit.
C) Any sales-type lease.
D) An operating lease.

Question

Quizplus · Accepted Answer

Initial direct costs are deferred and expensed over the lease term, generally on a straight-line basis in an operating lease.

The Costs That (A) Are Associated Directly with Consummating a Lease