When year-end occurs between payment dates, the lessee must accrue the interest expense and the lessor must accrue interest revenue at the end of the year.

Question

Quizplus · Accepted Answer

Both the lessee and lessor need to recognize the interest that has accrued up to the year-end, even if the payment date has not yet arrived, to accurately reflect their financial positions.

When Year-End Occurs Between Payment Dates, the Lessee Must Accrue