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Lessor accounting : Asset initial recognition

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA SBR Exams › Lessor accounting : Asset initial recognition

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  • August 4, 2023 at 5:40 pm #689385
    parag
    Participant
    • Topics: 9
    • Replies: 16
    • ☆

    If the lessor leases a machine for 4 years and the PV of the lease payment is 5000.

    Since the lessor has to recognize the PV of lease as Receivable in SFP is the below entry correct ?

    Dr. Receivable ( Lease ) 5000
    Cr. Machine ( held for lease) 5000

    Thanks,

    August 6, 2023 at 8:08 am #689437
    Stephen Widberg
    Keymaster
    • Topics: 16
    • Replies: 3418
    • ☆☆☆☆☆

    Either:

    1. She buys the asset prior to leasing it out:

    Dr Receivable Cr Cash 5000

    Or:

    2. She transfers an asset already owned to the lessee

    Dr Receivable 5000 Cr PPE (with CA) – any gain or loss in P&L

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