XYZ, the lessee, enters into a lease with a term of 10 months and monthly payments...
XYZ, the lessee, enters into a lease with a term of 10 months and monthly payments of $700 due at the beginning of each month. XYZ elects to apply the short term lease exception. What is the journal entry made each month to record the lease payments?
Homework Answers
As per IFRS16, A short term lease is a lease that, at the commencement date, has a lease term of 12 months or less and does not include an option to purchase the underlying asset. As a result, the lessee should record the lease payments made as expense on straight line basis.
Therefore, the journal entry to be made every month would be
Lease expense $700(Debit)
Cash $700 (Credit)
Please feel free to ask any queries. Thank you.
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