Which of the Following Is True of a Direct-Financing Lease

Multiple Choice

Which of the following is true of a direct-financing lease?

A) The lessor does not recognize sales revenue from the leased asset.
B) The lease agreement does not contain a provision for unguaranteed residual value.
C) The cost of the leased equipment is valued at the recorded cost assigned to the inventory.
D) The fair value of the leased asset is always greater than the carrying cost of the asset.