Question

___ are the costs incurred by the lessor that are directly associated with negotiating and consummating a leasing transaction.

Answer 1

Initial direct costs are the expenses incurred by lessors directly related to setting up a lease, including commissions and legal fees, essential for accurate financial reporting.

Step-by-step explanation:

Initial direct costs are the costs incurred by the lessor that are directly associated with negotiating and consummating a leasing transaction. These costs typically include commissions, legal fees, and internal costs that are incremental and directly attributable to securing the lease. Understanding these costs is important for accurate financial reporting and compliance with accounting standards such as the International Financial Reporting Standards (IFRS) or the Generally Accepted Accounting Principles (GAAP) in the United States.