Which of the following is an appropriate journal entry for the initial recognition by a lessor of a finance lease arrangement?
A) DR Lease receivable CR Asset;
B) DR Lease receivable CR Lease liability;
C) DR Leased asset: CR Cash/Trade payables;
D) DR Leased asset CR Cash.

Question

Quizplus · Accepted Answer

The correct journal entry for the initial recognition of a finance lease by a lessor is to debit (DR) Lease receivable, which represents the lessor's right to receive lease payments, and credit (CR) Asset, which removes the leased asset from the lessor's balance sheet, reflecting that the asset is now under the control of the lessee.

Which of the Following Is an Appropriate Journal Entry for the Initial