Related to Direct Financing Leases

Multiple Choice

Related to direct financing leases

A) the net investment in the lease should be adjusted each year by material increases (but not decreases) in estimated unguaranteed residual values
B) the lessor only reports interest revenue on the income statement
C) initial direct costs result in an increase in Unearned Interest Revenue-Leases by an amount equal to these costs in the year the costs are incurred
D) the lessor's gross margin is amortized over the life of the lease