Sales-type leases and direct financing leases are two common types of leases from a lessor’s perspective.
Compare and contrast a sales-type lease with a direct-financing lease on the following dimensions:
a. Gross investment in a lease.
b. Amortization of unearned interest income.
c. Manufacturers or dealers profit
Note: Do not discuss the criteria for distinguishing between sales-type, direct financing, and operating leases.
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