Which of the following is an appropriate journal entry for the initial recognition by a financier lessor of a finance lease arrangement?
A) DR Leased asset: CR Cash
B) DR Lease receivable: CR Asset
C) DR Lease receivable: CR Lease liability
D) DR Leased asset: CR Cash/accounts payable

Question

Quizplus · Accepted Answer

In a finance lease arrangement from the perspective of a lessor, the lessor records a lease receivable (representing the net investment in the lease) and derecognizes the asset leased out. Hence, the correct entry is to debit Lease Receivable and credit the Asset being leased out.

Which of the Following Is an Appropriate Journal Entry for the Initial