Question

The journal entries for Capital (ASPE) or Finance (IFRS) leases for the lessee include entries for...

The journal entries for Capital (ASPE) or Finance (IFRS) leases for the lessee include entries for all EXCEPT

A interest paid on the lease.

B rent expense.

C depreciation of the asset.

D setting up the lease asset and liability.

Business   Accounting   
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Answer #1

The correct answer is

B) Rent Expense

Calculation

In Financing lease rent expense is not recongnised as rent expense is recongnized in operating lease in which asset in not recongnized in books of account and liability against it is also not recognized, where as in financing lease asset is recongnized and liability is also booked against it and interest paid against the lease is booked against asset and depreciation is also booked against asset booked in financial lease.

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