At the inception of a finance lease which calls for payments on an annuity due basis, the lessee typically debits:

Question

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At the inception of a finance lease, the lessee recognizes the leased asset on their balance sheet. This is because a finance lease effectively transfers the risks and rewards of ownership from the lessor to the lessee, making it similar to purchasing the asset. Therefore, the lessee debits (increases) the leased asset account to record this acquisition.

At the Inception of a Finance Lease Which Calls for Payments