A finance lease is recorded in the accounting records of the lessee by an entry:

Question

Quizplus · Accepted Answer

A finance lease is recorded in the accounting records of the lessee by creating an asset and liability account. The asset account is debited for the present value of the future lease payments, representing the right to use the leased asset. The liability account is credited for the same amount, representing the obligation to make future lease payments. This is recorded at the inception of the lease and subsequently adjusted for accrued interest and lease payments made. Therefore, the correct option is C. Option A and B are incorrect as they are for operating leases. Option D is incorrect as Sales is not relevant for a finance lease.

A Finance Lease Is Recorded in the Accounting Records of the Lessee