Chapter 18 (Accounting for Leases) Flashcards
Operating Lease Initial Measurement: Lessee: Calculation
Initial Measurement Add: Initial Direct Costs Add: Prepayments Subtract: Incentives Right of Use Asset:
Operating Lease Initial Measurement: Lessee: Entries Prior to Commencement
Dr Prepaid Initial Direct Costs
Cr Cash
Dr Prepaid Lease Payment
Cr Cash
Dr Cash
Cr Liability for Lease Incentive
Operating Lease Initial Measurement: Lessee: Entries on Commencement
Dr Right of Use Asset Dr Liability for Lease Incentive Cr Lease Liability Cr Prepaid Lease Payment Cr Prepaid Initial Direct Costs
Operating Lease Subsequent Measurement: Lessee: Lease Expense Calculation
Annual Total Payments Add: Initial Direct Costs Add: Prepayments Subtract: Incentives Total Payments
Total Payments/Years (Lease Term)=Annual Lease Expense
Operating Lease Subsequent Measurement: Lessee: Amortization Table #1 Labels
Date
Payment (Cr Cash)
Interest (Implicit Rate)
Reduction in Lease Liability (Dr Lease Liability)
Balance
Operating Lease Subsequent Measurement: Lessee: Amortization Table #2 Labels
Date
Lease Expense (Dr Lease Expense)
Interest (Take values from Table #1)
Accumulated Amortization (Lease Expense-Interest)
Operating Lease Subsequent Measurement: Lessee: 12/31
Dr Lease Liability
Dr Lease Expense
Cr Cash
Cr Accumulated Amortization
Operating Lease Subsequent Measurement: Lessee: End of Lease Term
***Take it off the books
Dr Accumulated Amortization
Cr Right of Use Asset
Operating Lease: Lessor: Entries Prior to Commencement
***Expensed using the straight line method
Dr Prepaid Initial Direct Costs
Cr Cash
Operating Lease: Lessor: Commencement
Dr Cash
Dr Initial Direct Cost Expense
Cr Revenue
Cr Prepaid Initial Direct Costs
Finance Lease Initial Measurement: Lessee: Entries Prior to Commencement
Dr Prepaid Initial Direct Costs
Cr Cash
Finance Lease Initial Measurement: Lessee: Commencement
Dr Right of Use Asset
Cr Prepaid Initial Direct Costs
Cr Lease Liability
Finance Lease Initial Measurement: Lessee: Amortization Table Labels
Date
Payment (Cr Cash)
Interest (Implicit rate if known, if unknown then incremental borrowing rate)
Reduction in Lease Liability (Dr Lease Liability)
Balance
Finance Lease Initial Measurement: Lessee: First Lease Payment
Dr Lease Liability
Cr Cash
Operating Lease Initial Measurement: Lessee: First Lease Payment
Dr Lease Liability
Cr Cash
