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

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.

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