In Order to Properly Record a Direct-Financing Lease, the Lessor

question 19

Multiple Choice

In order to properly record a direct-financing lease, the lessor needs to know how to calculate the lease receivable. The lease receivable in a direct-financing lease is best defined as

• A) the amount of funds the lessor has tied up in the asset which is the subject of the direct-financing lease.
• B) the difference between the lease payments receivable and the fair value of the leased property.
• C) the present value of minimum lease payments.
• D) the total book value of the asset less any accumulated depreciation recorded by the lessor prior to the lease agreement.