How does the lessor classify the payment of initial direct costs related to an operating lease? Initial
Fantastic news! We've Found the answer you've been seeking!
Question:
How does the lessor classify the payment of initial direct costs related to an operating lease?
Initial direct costs are paid by the lessee, not the lessor.
There are no initial direct costs in an operating lease. If there are initial direct costs, the lease should be classified as a finance lease.
In an operating lease, initial direct costs should be expensed.
Initial direct costs should be recorded as an asset and amortized over the lease term.
Related Book For
Intermediate Accounting
ISBN: 978-0134730370
2nd edition
Authors: Elizabeth A. Gordon, Jana S. Raedy, Alexander J. Sannella
Posted Date: