Initial Direct Costs Incurred by a Lessor in Consummating a Sales-Type

question 20

Multiple Choice

Initial direct costs incurred by a lessor in consummating a sales-type lease are

• A) charged to unearned income in the first period of the lease term.
• B) charged to cost of sales in the first period of the lease term.
• C) deferred and allocated over the lease term in proportion to the recognition of rent revenue.
• D) deferred and allocated over the lease term on a straight-line basis.

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