Final answer:
The primary difference between a direct-financing lease and a sales-type lease is the recognition of the manufacturer's or dealer's profit at the inception of the lease (option c).
Step-by-step explanation:
The primary difference between a direct-financing lease and a sales-type lease is the recognition of the manufacturer's or dealer's profit at the inception of the lease. In a direct-financing lease, the lessor does not recognize a profit or loss at the beginning of the lease.
Instead, the lessor records only the difference between the rental receipts and the cost of the leased asset over the lease term as rental income. On the other hand, in a sales-type lease, the lessor recognizes a profit at the inception of the lease based on the fair value of the leased asset.
The other options mentioned in the question are not the primary differences between the two types of leases. The manner in which rental receipts are recorded as rental income can vary depending on the accounting method used by the lessor, and it is not specific to either a direct-financing lease or a sales-type lease.
The amount of depreciation recorded each year by the lessor also depends on the specific terms of the lease agreement. The allocation of initial direct costs by the lessor to periods benefited by the lease arrangements is a secondary consideration and does not differentiate between the two types of leases.