A Lease Will Be Treated as a Direct Financing Lease

A lease will be treated as a direct financing lease by the lessor when

A) the lessor is a financial institution
B) the interest revenue element is determined in such a manner as to produce a constant periodic rate of return on the net investment of the lease
C) at least one of the four basic criteria is met, collectibility of the minimum lease payments is reasonably assured, no uncertainties surround the amount of the unreimbursable costs, and the lessor does not have a dealer profit or loss
D) the lease agreement contains a provision for unguaranteed residual value

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