Which of the Following Is a Difference Between a Direct-Financing

question 85

Multiple Choice

Which of the following is a difference between a direct-financing lease and a sales-type lease?

• A) Unlike a direct-financing lease, a sales-type lease includes a manufacturer's or a dealer's profit or loss.
• B) Unlike in a direct-financing lease, the depreciation expense on the leased asset in a sales-type lease is recorded in the accounts of the lessor.
• C) Unlike in a sales-type lease, the lessee in a direct-financing lease recognizes a right-of-use asset and a lease liability at the commencement of the lease.
• D) Unlike a sales-type lease, a direct-financing lease involves the transfer of ownership to the lessee.

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Definitions:

Oil Refinement

The process of transforming crude oil into useful products like gasoline, diesel, and jet fuel through various physical and chemical treatments.

Pollution Fee

A financial charge applied to entities that emit pollutants, intended to discourage environmental pollution by making it economically costly.

Marginal External Cost

The cost imposed on a third party by the production of an additional unit of a good or service.

Production Efficiency

A level of output where a company cannot produce more of one good without reducing the output of another good, utilizing resources optimally.