- CFA Exams
- CFA Level I Exam
- Topic 4. Financial Statement Analysis
- Learning Module 8. Topics in Long-Term Liabilities and Equity
- Subject 4. Accounting and Reporting by the Lessor
CFA Practice Question
Under IFRS, how are initial direct costs incurred by a lessor in negotiating a sales-type lease treated?
B. They are deferred and expensed over the lease term on a straight-line basis.
C. They are debited to unearned interest revenue in the first period of the lease term.
A. They are expensed in the first period of the lease term.
B. They are deferred and expensed over the lease term on a straight-line basis.
C. They are debited to unearned interest revenue in the first period of the lease term.
Correct Answer: A
These costs associated with the sale should be expensed in the period of the sale in accordance with the matching principle.
User Contributed Comments 3
| User | Comment |
|---|---|
| johntan1979 | Is it different under GAAP? |
| robbiecow | Yup, for sales-type leases initial direct costs are expensed at the inception of the lease |
| robbiecow | Meant Yup, it is the same. |