The basic accounting issue for lessors is:

Question

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The basic accounting issue for lessors is revenue recognition during the lease term. This involves determining the appropriate amount of lease revenue to recognize over the lease term and the method to use for recognizing that revenue. Other accounting issues for lessors may include determining the cost of the leased asset and computing depreciation, but revenue recognition is the most fundamental issue. Lessors need to use a systematic and rational method for recognizing revenue that reflects the substance of the lease agreement and the risks and rewards associated with ownership of the leased asset.

The Basic Accounting Issue for Lessors Is