If the Lessor Incurs Initial Direct Cost to Bring About

Multiple Choice

If the lessor incurs initial direct cost to bring about the lease,when are those costs expensed in total during the first year of the lease term?

A) When the lease is classified as a sales-type lease.
B) When the lease is classified as a direct financing lease.
C) When the lease is classified as an operating lease.
D) Initial direct costs are always expensed during the first year of the lease term.