Assume that a lessor applies the five criteria to a lease involving equipment and determines that a lease should be classified a

Question

3 years ago

8

Assume that a lessor applies the five criteria to a lease involving equipment and determines that a lease should be classified a

s a sales-type lease. The entry the lessor will record at the beginning of the lease will include a _______.
Multiple Choice:
O Credit to Right-of-use asset for the carrying amount of the equipment.
O Credit to Right-of-use asset for the present value of the lease payments.
O Debit to Lease receivable for the present value of the lease payments.
O Debit to Lease receivable for the sum of the cash payments over the term of the lease.

Business

1 answer:

Vaselesa [24] · Answer 1 · 2022-06-09T22:37:23+03:00

Vaselesa [24]3 years ago

4 0

Answer:

Debit to Lease receivable for the sum of the cash payments over the term of the lease.

Explanation:

Lease payments are classified as an asset receivable to the lessor in the future. Hence we debit lease receivable.