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40.60.30.1 Entries for Right-To-Use Lease Asset (Lessor)

40.60.30.1 Entries for Right-To-Use Lease Asset (Lessor)

The illustrative entries and instructions below are based on the amortization schedule shown in Section 40.60.30 Right-To-Use Lease Asset (Lessor).

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At the commencement of the lease term, the lease is recorded in the appropriate fund as follows:

Account Account Description DR CR

1010250

Lease Receivable – Short-Term

$ 253,246.23

 

1100040

Lease Receivable – Long-Term

581,873.14

 

2200100

Deferred Inflows on Right-to-use Asset

 

835,119.36

Record revenue received each month as a credit to account 4030020 - Income from Property. At year end, reclassify revenue to principal and interest on leases.

Account Account Description DR CR

4030020

Income from property

$ 258,500.00

 

1010250

  Lease Receivable – Short-Term

 

253,246.23

4130060

  Leased Property Interest Income

 

5,253.77

At year-end, reduce the deferred inflow on leases and recognize a portion of the revenue. Deferred revenues should be amortized over the lease term using the straight-line method.

Account Account Description DR CR

2200100

Deferred Inflows on Right-to-use asset

$ 255,175.36

 

4130070

Income from leased property

 

255,175.36

At year-end, reclassify as short term that portion of the receivable due within the next fiscal year. At fiscal year-end, the amount of short-term receivable should be the same as the next year’s principal payment on the lease contract’s amortization schedule.

Account Account Description DR CR

1010250

Lease Receivable Short-Term

$ 277,953.33

 

1100040

  Lease Receivable Long-Term

 

277,953.33

At year-end an allowance is calculated and recorded for estimated uncollectible lease receivable, if applicable. If collectability appears improved, the entry would be reversed.

Account Account Description DR CR

2200100

Deferred Inflows on Right-to-use asset

$ xxx.xx

 

1010260 or 1100050

Allow-Uncollectible Lease Receivable Short-Term or
Allow-Uncollectible Lease Receivable Long-Term

 

xxx.xx

If the lease contract has ended at the end of the lease term, no entry is required.

If the lease contract has ended early, remove the remaining balances.

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Last Modified: 1/30/24, 4:48 PM

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