CFA Practice Question

There are 520 practice questions for this study session.

CFA Practice Question

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?
Correct Answer: 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
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