Which of the Following Statements Is True About Initial Direct

question 39

Multiple Choice

Which of the following statements is true about initial direct costs?

• A)Initial direct costs should always be debited against income by the lessor in the period of the inception of the lease.
• B)Initial direct costs are ownership-type costs such as insurance, maintenance, and taxes.
• C)Initial direct costs of an operating lease should be recorded by the lessor as a prepaid asset.
• D)Initial direct costs of a sales-type lease should be expensed as incurred, and an equal amount of the unearned income should be recognized as income in the same period.

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Definitions:

Market Price

The current price at which a good or service can be bought or sold in the market, determined by the forces of supply and demand.

Fishery

An area with a natural or artificial population of aquatic life that is used for fishing purposes.

Location

The specific place or position where something exists or is situated, often relevant in decision-making processes for businesses and individuals.

Species

In biology, a group of living organisms consisting of similar individuals capable of exchanging genes or interbreeding.