[martimann]

Hello everyone,
I’m struggling on leases, are initial direct costs considered executory costs? Becker states that for capital leases executory costs need not be included in the calculation of the PV of minimum lease payments (in other words they are ignored and expensed)?? But cpa excel mentions that for direct financing leases these are to be capitalized and amortized. Here’s the explanation they provide:

Direct financing lease: Initial direct costs (added to net investment causing a new implicit rate of interest) Then amortized.

Sales type leases: Initial direct costs (expensed immediately) Dealer’s profit.

Can someone clarify this, are we suppose to capitalize those costs as part of the calculation min lease payments for direct finance leases? Any help appreciated I already research a little but still find either no info or mixed. Thanks.