When a capital lease payment of $20,000 is legally due,an entry is made in the debt service fund to record the expenditure of $20,000,and an entry is made in the governmental activities accounts to reduce Capital Lease Obligations Payable by $20,000.

Question

Quizplus · Accepted Answer

The first part of the statement is correct, but the reduction of Capital Lease Obligations Payable in the governmental activities accounts should only be for the portion of the payment that is a payment on principal of the lease obligation, not for the portion that is a payment of interest on the unpaid lease obligation.

When a Capital Lease Payment of $20,000 Is Legally Due,an