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In order to properly record a direct-financing lease, the lessor needs to know how to calculate the lease receivable. The lease receivable in a direct-financing lease is best defined as

The amount of funds the lessor has tied up in the asset which is the subject of the direct-financing lease.
The difference between the lease payments receivable and the fair market value of the leased property
The present value of minimum lease payments.
The total book value of the asset less any accumulated depreciation recorded by the lessor prior to the lease agreement.

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Solution Summary

The solution explains the correct alternative in relation to lease receivable under a direct financing lease