What Is the Difference Between a Sales-Type and a Direct

question 42

Essay

What is the difference between a sales-type and a direct financing type of finance lease under ASC 842?

---

Definitions:

Implicit Costs

Costs that represent the opportunity cost of using resources owned by the firm for its own production instead of earning income elsewhere.

Accounting Profit

The net income reported on the financial statements, calculated as total revenues minus explicit costs.

Economic Profit

The difference between the total revenue generated by a business and the total costs, including both explicit and implicit costs.

Marginal Product

The additional output that is produced by adding one more unit of a particular input, holding all other inputs constant.