A 5-year lease contract is signed on 1/1/x1 calling for $4,000 to be paid by the lessee on 12/31/x1,and $6,000 on 12/31/x2,x3,and x4.Total lease payments over the lease term are therefore $22,000.The lessee expects to use the leased asset evenly throughout the lease term,which ends 12/31/x4.No payment is due in 20x2.The entry recorded by the lessee for this operating lease,on 12/31/x1 includes which of the following?

Question

Quizplus · Accepted Answer

The lessee will make a payment of $4,000 on 12/31/x1. As this is an operating lease, the lessee will recognize rent expense of $4,000 on 12/31/x1. Therefore, the correct entry is dr. rent expense $4,000. The other options are incorrect as there is no rent payable, prepaid rent, or additional rent expense to be recognized on this date.

A 5-Year Lease Contract Is Signed on 1/1/x1 Calling for $4,000