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How do i deal with the transaction below ? I have never came across lease premiums before. And also i understand for finance lease, the rental payments whether in advance or arrears does affect the calculation. How about for operating lease? Does it affect too ? What is a lease premium ? Is it a deposit
Given on trial bal: Operating lease payments $2000
Clarion renewed an operating lease on a property on 1 april 2014. The operating lease payments represent an annual payment (in advance) of $1m and a lease premium of $1m. The lease is for 4 years and operating lease expenses should be included in cost of sales.
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