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Basic Question 6 of 15
American Insurance Company leases trucks to trucking companies. The leases both transfer property rights to the lessees and give the insurance company a reasonably accurate estimate of the amount and collectability of the future cash inflows. What type of leases are these?
B. Sales-type lease
C. Direct financing lease
A. Operating lease
B. Sales-type lease
C. Direct financing lease
User Contributed Comments 6
| User | Comment |
|---|---|
| katybo | what is the difference with CL? bargain option? |
| Done | And they don't manufacture the trucks they lease |
| Nightsurfer | Good comment Done. |
| thekobe | Direct Financing with an intermediary |
| johntan1979 | The keywords as to why direct financing, not sales type lease is "American Insurance Company" = financial institution |
| johntan1979 | And like what Done said, they don't manufacture the trucks. Read the notes: Main difference between direct financing and sales type is the absence/presence of manufacturer's or dealer's profit |
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Learning Outcome Statements
explain the financial reporting of leases from the perspectives of lessors and lessees
CFA® 2024 Level I Curriculum, Volume 2, Module 8.