Assume that the five classification criteria are applied to a lease involving equipment and, because none...
Assume that the five classification criteria are applied to a lease involving equipment and, because none of the criteria is met, it is determined that a lease should be classified as an operating lease. At the beginning of the lease, the lessee:
Multiple Choice
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a. Does not record an entry.
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b. Records an entry that includes a debit to Right-of-use asset for the carrying amount of the equipment.
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c. Records an entry that includes a debit to Right-of-use asset for the present value of the lease payments.
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d. Records an entry that includes a debit to Equipment for the present value of the lease payments.
Homework Answers
| At the beginning of the lease, the lessee Records an entry that includes a debit to Right-of-use asset for the present value of the lease payments |
| When a lease is classified as an operating lease, the lease is recorded with a debit to Right-of-use asset for the present value of the lease payments. |
| Option C is correct |
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