In a lease that is appropriately recorded as a direct-financing lease by the lessor, the unearned income

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In a lease that is appropriately recorded as a direct-financing lease by the lessor, the unearned income

a. should be amortized over the period of the lease using the effective interest method.
b. should be amortized over the period of the lease using the straight-line method.
c. does not arise.
d. should be recognized at the lease’s expiration.

Answer: should be amortized over the period of the lease using the effective interest method

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