Leases - Direct Financing Lease

Question 1

Basic rules for Direct financing lease

Answer 1

Any amount over principal is interest revenue over the life of the lease

Question 2

Calculation rules for Direct financing lease

Answer 2

Payments reduce principal

Interest increases principal amount

Question 3

Direct financing leases

Answer 3

Are for companies that are not dealers or Manufacturers

Question 4

Lessor ALWAYS uses the

Answer 4

Implicit Rate built into the contract

Question 5

In a direct financing lease

Answer 5

All profit is recognized over the life of the lease