Leases and Bonds

Question 1

Finance lease
Liability will equal -

Answer 1

Present value of lease payments, including commission, legal and consulting 

Question 2

Finance lease journal entries 

Answer 2

Initial entry
Debit ROU asset
Credit lease liability

Subsequent entries
Debit interest expense,
Debit lease liability
Credit cash/lease payable

Debit amortization expense,
credit accumulated amortization rou asset

Question 3

Operating lease
Results in Lease lability and ROU asset 

What are the journal entries? 

Answer 3

Debit ROU asset
Credit lease liability

Debit lease expense
Credit cash/lease liability

Debit lease liability,
Credit accumulated amortization, ROU asset