- 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
The following type(s) of income is (are) recognized by a lessor for direct financing leases:
II. Gain on sale
III. Rental revenue
I. Interest revenue
II. Gain on sale
III. Rental revenue
Correct Answer: I
When a lease is a direct financing lease, there is no gain on the sale. The cost of the asset is equal to the fair value (or present value) of the asset. As a direct financing lease is a type of capital lease, there is no rent revenue, only interest revenue.
User Contributed Comments 1
| User | Comment |
|---|---|
| johntan1979 | II sales type lease III operating lease |