CFA Practice Question

There are 520 practice questions for this study session.

CFA Practice Question

Under IFRS, how are initial direct costs incurred by a lessor in negotiating a sales-type lease treated?

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.
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