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Basic Question 5 of 15
In accounting for a capital lease, the lessor debits a leased asset account for the present value of the minimum lease payments. True or False?
User Contributed Comments 10
| User | Comment |
|---|---|
| gsuwp | Nothing is recorded at initiation. |
| mtcfa | The net invetment in the lease is recorded: it = PV of mlp's PLUS PV of residual value. |
| Masterkang | mtcfa is right, "nothing is recorded at initiation" is plainly wrong. |
| danrow | Someone can explain this? Is it that it is actually a credit to an Asset account? |
| leases | Leased Asset Account - Credit (-) Lease Receivable Account - Debit (+) |
| bundy | I was assuming the residual was zero ...don't assume debits leased asset account for PV of lease payments and PV of residual |
| johntan1979 | For lessor, you don't credit or debit a leased asset account. You replace it with net investment in lease. |
| johntan1979 | Sorry, leases is right. Credit lease asset acct, debit lease receivable acct. |
| robbiecow | Under a capital lease the lessor will remove the asset from its balance sheet and replace it with a receivable for the present value of the minimum lease payments. |
| Freddie33 | Of course leases is right. This chapter is about him/he |
I am using your study notes and I know of at least 5 other friends of mine who used it and passed the exam last Dec. Keep up your great work!
Barnes
Learning Outcome Statements
explain the financial reporting of leases from the perspectives of lessors and lessees
CFA® 2024 Level I Curriculum, Volume 2, Module 8.