A lease must be treated as a direct financing lease by the lessor when at least one of the four basic criteria is met, collectability of the minimum lease payments is reasonably assured, no uncertainties surround the amount of the unreimbursable costs, and

1. the lessor is a financial institution.

2. the interest revenue element is determined in such a manner as to produce a constant rate of return on the net investment of the lease.

3. the lessor does not have a dealer profit or loss.

4. the lease agreement contains a provision for the unguaranteed residual value.

Answer rating: 100% (QA)

Ans the lessor does not have a dealer profit or loss Explanation A lessor need ... View the full answer