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

question 135

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 lessor are deferred and expensed over the lease term:

• A) Only in an operating lease.
• B) Only in a sales-type lease with selling profit.
• C) Only in a sales-type lease with no selling profit.
• D) In both an operating lease and a sales-type lease with no selling profit.

---

Definitions:

Unenforceable

A term that describes a contract or clause that, due to certain legal deficiencies, cannot be upheld or enforced by a court.

Commercial Relationships

Professional interactions and dealings between businesses or between businesses and customers that involve the exchange of goods, services, or information.

Legally Binding

An agreement or contract that is enforceable by law, meaning parties must fulfill their specified obligations or face legal consequences.

Commission of Crime

The act of carrying out a criminal offense or the process by which a crime is perpetrated.