CFA Practice Question

There are 520 practice questions for this study session.

CFA Practice Question

How does a lessor determine the net investment in a capital lease?

A. It is the sum of the balances in the "gross investment in leased asset" account and the "unearned financing income" account.
B. It is the difference between the balances in the "gross investment in leased asset" account and the "unearned financing income" account.
C. It is the balance in the "net investment in leased asset" account.
Correct Answer: B

On the lessor's books, the leased asset is removed and replaced with these two accounts, which represent the net investment of the lease.

User Contributed Comments 5

User Comment
kalps Difference between: Gross investment in leased asset - unearned financing = net investment in a capital lease
mtcfa And is also equivalent to the PV of the lease payments plus the present value of the residual value.
gill15 nice mtcfa
Shaan23 I dont know what B means but I understand MTCFA.
CJHughes Determine the Net (difference). Option 2
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