Problem: In order to properly record a direct-financing lease, the lessor needs to know how to calculate the lease receivable. The lease receivable in a direct-financing lease is best defined as
- The amount of funds the lessor has tied up in the asset which is the subject of the direct-financing lease.
- The difference between the lease payments receivable and the fair market value of the leased property
- The present value of minimum lease payments.
- The total book value of the asset less any accumulated depreciation recorded by the lessor prior to the lease agreement.