Answer to Question #185721 in Accounting for Milan

Question #185721

Debit Lease Receivable

Debit Loss

Credit Fixed Assets

  • What does this journal entry mean?
1
Expert's answer
2021-04-30T07:38:08-0400

Debit lease receivable: lease allows companies to make use of large pieces of equipment without paying for them. There are two types of lease namely capital lease and operating lease. Under a capital lease, the lessor credits owned assets and debits a lease-receivable account for the present value of the rents

Debit Loss: Losses occurs when an asset is sold for less than the amount spent to purchase it. The loss reflects an amount that the business should have but is not realized. This value is thus treated as a debit.

Credit fixed assets: Fixed assets are assets that have a long term life and are bought to be used in the normal business operations. In accounting for fixed assets we credit fixed assets in case we are accounting for: gains on the sale of an asset, loss on the sale of an asset, write off of an asset as well as when we remove an asset that has been fully depreciated. We accompany this credits on fixed assets with respective debits.


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