Under sales-type leases and direct-financing leases, gains and interest revenue are recognized using the interest method. The difference between the PV of lease payments and book value of leased asset is your profit. Amortized that over the life of the lease (or life of the asset, whichever is shorter) by multiplying the interest rate by monthly lease payment and applying that to interest, take the remainder and apply that to the carrying value of the lease, like it's no big deal.
Knowing the difference between Operating and Capital leases seems like an important distinction the AICPA wants to test. There are four criteria that you should know that make a lease "Capital". I'm dying to provide this link to a Roger CPA video I found on youtube. I wish there were more, but that's all they posted.
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