A golf resort leases luxury vehicles for transporting quests to local restaurants and entertainment spots. The car leases are typically for former demo or showroom floor models. After six months, the cars are returned to the dealer and sold as used cars.

HOW would the dealership (lessor report this transaction on its income statement?

Financing lease, payments are amortizations of receivable and interest revenue

Financing lease sale and cost of goods sold (COGS) are recorded

Operating lease: payments are revenues and reduce liability

Short-term operating lease; revenue from the current period, and cars remain owned assets in service