Respuesta :
Imhoff Company leases a new building from Noble Construction, Inc. The present value of the lease payments is given $700,000.
The journal entry for the following data will be given:
Dr- right-of-use asset | $700,000 (debit side)
Cr- lease liability | $700,000 (credit side)
When engaging in the finance lease, the business would have to account for both the lease debt and the lease as an asset (right-of-use asset) (present value of lease obligations owed to the lessor).
As a result, $700,000 would be deducted from the right-of-use asset and charged to the lease liabilities.
A journal entry is an act of recording any transaction, whether it is economic or not. An accounting diary that displays the debit and credit balances of a corporation lists transactions. Multiple recordings, each of which is either a debit or a credit, may be included in the journal entry.
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