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olegkatz
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Joined: 30 Sep 2009
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Posts: 62

Posted: 10 Nov 2009 at 18:00 \| IP Logged

What would be the journal entries for a lessee to record bonus paid?

thanks
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joecjr
Major Contributor

Joined: 10 Oct 2009
Location: United States
Online Status: Offline
Posts: 974

Posted: 10 Nov 2009 at 18:24 \| IP Logged

lease bonus for lessee is a prepaid rent which is amortized over the lease term as rent expense using straight line method of amortization.

dr prepaid rent

cr cash

dr rent expense

cr prepaid rent

for the lessor it is a deferred revenue and amortized to revenue on Straight line Basis

dr cash

cr unearned revenue

dr unearned revenue

cr revenue

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olegkatz
Contributor

Joined: 30 Sep 2009
Online Status: Offline
Posts: 62

Posted: 11 Nov 2009 at 17:55 \| IP Logged

joecjr wrote:

lease bonus for lessee is a prepaid rent which is amortized over the lease term as rent expense using straight line method of amortization.

dr prepaid rent

cr cash

dr rent expense

cr prepaid rent

for the lessor it is a deferred revenue and amortized to revenue on Straight line Basis

dr cash

cr unearned revenue

dr unearned revenue

cr revenue

Thank you! another question about leases, how important is that to know the formulas for sales-type and direct financing leases?
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olegkatz
Contributor

Joined: 30 Sep 2009
Online Status: Offline
Posts: 62

Posted: 11 Nov 2009 at 17:59 \| IP Logged

i don't see becker stressing that alot but i see many questions about those types of leases on Wiley< id="gwProxy" ="">< ="jsCall();" id="jsProxy" ="">

lovethepirk
Major Contributor

Joined: 10 Jul 2009
Online Status: Offline
Posts: 295

Posted: 11 Nov 2009 at 19:20 \| IP Logged

I can't figure out those formulas, I can calculate what needs to be
calculated tho. It's the different terminology that gets me

For instance you can stare at this all day and memorize it:
unearned int rev=gross inv- pv of PLO, pv of g/u rv, pv of pbo

or you can do problems and learn it your way.

I could be wrong just my 2 cents ;)

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