Timely Limited accepts a lease incentive to enter into a 4-year operating lease for equipment. The incentive is cash amounting to $10 000 that will be paid on the date the lease agreement is signed. On inception of the lease, the lessor will record:

Question

Quizplus · Accepted Answer

On inception of the lease, the lessor will record a debit to Cash for the lease incentive received, and a credit to Lease Incentive Liability. Choice B correctly reflects this accounting treatment by recording a debit to Cash and a credit to Lease Incentive Liability.

Timely Limited Accepts a Lease Incentive to Enter into a 4-Year