Which feature defines a sales-type lease?

• A. It transfers ownership and profit to the lessor.
• B. It does not transfer ownership.
• C. It requires a bargain purchase option by the lessee.
• D. It is always shorter than a direct financing lease.

Answer: (B)

In a sales-type lease, the accounting treatment looks like a sale of the asset by the lessor, and the transaction is characterized by the lessor recognizing a selling profit at inception. The feature highlighted here is that ownership does not transfer to the lessee. This distinction matters because it separates sales-type leases from other lease types (like arrangements where ownership is transferred or where a bargain purchase option is exercised). Since the defining characteristic in this context is that ownership remains with the lessor (no transfer to the lessee), the statement reflects the best identifying feature of a sales-type lease.