Initial direct costs are recorded as assets and amortized over the term of the lease in ________.
A)an operating lease
B)a capital lease
C)a sales-type lease
D)a direct financing lease

Question

Quizplus · Accepted Answer

Initial direct costs are capitalized as an asset and amortized over the term of the lease in a capital lease. In an operating lease, initial direct costs are expensed immediately. In sales-type and direct financing leases, initial direct costs are recognized as income at lease inception.

Initial Direct Costs Are Recorded as Assets and Amortized Over