Assume the lessee makes equal monthly payments at the

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Unformatted text preview: accounts for a capital lease both at inception of the lease and during the first year of the lease. - Under a capital lease, the lessee does not record rent as an expense. Instead, the rent is reclassified as interest and obligation payments calculated each rental period on the outstanding obligation balance Describe how a lessee accounts for an operating lease both at inception of the lease and during the first year of the lease. Assume the lessee makes equal monthly payments at the beginning of each month during the lease term - Under an operating lease, the lessee records rent expense over the lease term, and a credit to either cash or rent payable. If an operating lease has scheduled changes in rent, normally the rent must be expensed on a straight line basis over its life, with a deferred liability or asset reported on the balance sheet for the difference...
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