alleryStart learning →A lessor's initial direct costs on a finance lease are expensed or
AAdded to leased asset cost
BSet against residual value
CAllocated against finance income
DAdded to lessee's liability
Answer & Solution
Correct answer: C. Allocated against finance income
Such costs are produced to earn finance income, so they are expensed at once or allocated against that income over the term.
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