The Lessor Recognizes a Profit at the Inception of the Lease

question 22

Multiple Choice

The lessor recognizes a profit at the inception of the lease when the lease is classified as a(n) :

• A) operating lease.
• B) non-finance lease.
• C) direct financing lease.
• D) sales-type lease.

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Definitions:

Expected

Referring to what is considered likely or anticipated in terms of events, values, or outcomes.

Unit Contribution Margin

The difference between the selling price per unit and the variable cost per unit of a product.

Unit Sales

The total quantity of a product sold by a company, not accounting for the revenue generated or any discounts offered.

Break-Even Volume

is the quantity of sales necessary to cover all fixed and variable costs, resulting in zero profit or loss.