Which of the following statements is true about initial direct costs? A. Initial direct costs of a sales-type lease should be expensed at the commencement of the lease only if no selling profit or loss has been incurred. B. Initial direct costs are ownership-type costs such as insurance, maintenance, and taxes. C. Initial direct costs of an operating lease should be recorded by the lessor as a prepaid asset. D. Initial direct costs should always be debited against income by the lessor in the period of the inception of the lease.

FINANCIAL ACCOUNTING
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Author:Libby
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Chapter1: Financial Statements And Business Decisions
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Which of the following statements is true about initial direct costs?

A. Initial direct costs of a sales-type lease should be expensed at the commencement of the lease only if no selling profit or loss has been incurred.
B. Initial direct costs are ownership-type costs such as insurance, maintenance, and taxes.
C. Initial direct costs of an operating lease should be recorded by the lessor as a prepaid asset.
D. Initial direct costs should always be debited against income by the lessor in the period of the inception of the lease.
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