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Opening entry for the asset leased
Debit asset acct
Cr obligatory acctThis is what you said .
If there was no incorrect treatment of debiting the operating expense.
What was suppose to be the treatment?
You said the obligatory acct should be debited with the 210,000.
Badger RE acct will be credited to show the profit as the annual payment for the lease !
That means this Obligatory account will be reduced by this amount after debiting it. Am I right sir?
That is correct (and it’s an Obligation Account, not an Obligatory Account)
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