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Basic Question 10 of 15
Which of the following statements characterizes a sales-type lease?
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.
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. |
I used your notes and passed ... highly recommended!
Lauren
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.