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Basic Question 10 of 15

Which of the following statements characterizes a sales-type lease?

A. The lessor recognizes only interest revenue over the lease term.
B. The lessor recognizes both a dealer's profit and interest revenue over the lease term.
C. The lessor recognizes a dealer's profit at inception and interest revenue over the lease term.
D. The lessor recognizes a dealer's profit at inception and interest revenue over the asset life.

User Contributed Comments 4

User Comment
kalps Sales type lease: 2 forms of revenue: (1) Sales revenue (2) The financing revenue over the lease term
danlan Lessor holds the asset over the lease term, then transfer it to lessee, so the interest over lease term only, C and not D.
danrow What is the difference between this question and number seven? shouldn't the profit at inception be spread over the life of the lease agreement?
thekapila Q7 is for lessee, and this is for lessor.
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Craig Baugh

Learning Outcome Statements

explain the financial reporting of leases from the perspectives of lessors and lessees

CFA® 2025 Level I Curriculum, Volume 2, Module 8.