Any Initial Direct Costs Incurred by the Lessor for a Lease

question 37

Multiple Choice

Any initial direct costs incurred by the lessor for a lease agreement that is classified as an operating lease should be

• A)expensed in the same period that the expenditure is made
• B)recorded as a prepaid asset and allocated to expense over the lease term
• C)deferred and recognized as a reduction in the interest rate implicit in the lease
• D)directly charged (debited)to Retained Earnings

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