In Accounting for the Intial Direct Costs for a Sales-Type

question 24

True/False

In accounting for the intial direct costs for a sales-type lease, the lessor adds intial direct costs to the net investment in the lease and amortizes them over the life of the lease as a yield adjustment.

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Definitions:

Creditor

An individual or entity to whom money is owed by another party, known as the debtor.

Mortgage

A legal agreement by which a bank or creditor lends money at interest in exchange for taking title of the debtor's property, with the condition that the conveyance of title becomes void upon the payment of the debt.

Debtor

An entity or person that owes money to another party.

Instrument

A tool or device used for performing specific tasks, often scientific, musical, or technical functions.