A direct financing lease differs from a sales-type lease in that

A) the direct financing lease does not have a dealer profit, although it may have a dealer loss
B) the direct financing lease provisions cannot include a bargain purchase option
C) the sales-type lease does not have unearned interest income at the inception of the lease
D) the direct financing lease does not have a dealer profit or loss

Direct Financing Lease

A type of lease where the lessor effectively finances the leased asset, and the lease payments are structured to cover the original cost plus a profit margin.

Sales-Type Lease

A lease agreement where the lessor earns interest income over the lease term, treating the transaction like a sale.

Dealer Profit

The margin or financial gain a dealer achieves from the buying and selling of products or securities.