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- May 25, 2020 at 8:50 am
Hi sir,
1)A company rents out its warehouse.A chemical had contaminated the land surrounding the land.The lessee had capitalised the warehouse and will use it for 5 years.Hence,who must recoginse the provision for the clean up cost.The lessee or lessor.
2)May I know what are ledgers the lessor must create when they lease out an asset when the lessee had capitalised the asset.
Thank you..
May 25, 2020 at 3:47 pm1. Depends who contaminated the land and who has the legal obligation to sort it out. If it’s the lessee – then lessee.
2. Depends on whether finance or operating lease – finance is receivables and operating is PPE – please review our lecture and notes
Don’t forget that lessee and lessor accounting now follow different rules – lessors still use FL and OL.
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