
Concept explainers
(a)
Lease
Lease is an agreement where the owner of the property like building, equipment will make use of property for a specific period of time at a specific set of payments to owner. The owner of the property is known as lessor and the person who uses the property is the lessee.
Finance lease
In finance lease all the ownership risks and responsibilities are transferred from the lessor to the lessee.
Operating leases
In an operating lease lessor retains all ownership risks and responsibilities.
To Identify: The leases as operating or finance leases.
(b)
To Prepare:
(c)
To prepare: The journal entry to record operating lease.

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Chapter K Solutions
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