Depreciation Expense Will Be Recorded in the Accounts of the Lessee

Multiple Choice

Depreciation expense will be recorded in the accounts of the lessee and lessor for which type of leases? $\begin{array}{lll} & \text { Lessee} & \text { Lessor}\\\text { I. } & \text { operating } & \text { direct financing } \\\text { II. } & \text { capital } & \text { operating } \\\text { III. } & \text { operating } & \text { operating } \\\text { IV. } & \text { capital } & \text { sales-type }\end{array}$

A) I
B) II
C) III
D) IV