Asked by Nirvir Khosa on May 22, 2024
Verified
When a lessor receives cash on a sales-type lease, which of the following accounts is decreased?
A) Interest Revenue: Leases
B) Lease Rental Revenue
C) Lease Receivable
D) Unearned Interest: Leases
Sales-type Lease
A leasing arrangement in which the lessor recognizes immediate profit on the leased asset, often used in scenarios where the lessor is also the manufacturer or dealer of the equipment.
Lease Receivable
Represents the payments that a lessor is entitled to receive based on the terms of a lease agreement.
Interest Revenue
Income earned by an entity from lending money or investing in interest-bearing financial instruments.
- Understand the accounting treatment for lease payments received by a lessor in a sales-type lease.
Verified Answer
Learning Objectives
- Understand the accounting treatment for lease payments received by a lessor in a sales-type lease.
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