The Costs That (A) Are Associated Directly with Consummating a Lease

question 204

Multiple Choice

The costs that (a) are associated directly with consummating a lease, (b) are essential to acquire the lease, and (c) would not have been incurred had the lease agreement not occurred, are referred to as initial direct costs. Initial direct costs incurred by the lessee are:

• A) added to the right-of-use asset and expensed over an amortization period.
• B) recorded as an expense at the beginning of the lease.
• C) deferred in an operating lease until the asset is returned to the lessor.
• D) a reduction to the lease liability at the beginning of the lease.

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Definitions:

Deafness

The condition of lacking the power of hearing or having impaired hearing.

Auricle

The outer part of the ear; also known as the pinna.

Malleus

A small bone in the middle ear that transmits sound vibrations from the eardrum to the incus.

Utricle

A small sac-like structure in the inner ear that is part of the vestibular system, helping to sense gravity and linear acceleration.