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Intermediate Accounting: Reporting...

3rd Edition
James M. Wahlen + 2 others
ISBN: 9781337788281

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BuyFindarrow_forward

Intermediate Accounting: Reporting...

3rd Edition
James M. Wahlen + 2 others
ISBN: 9781337788281
Textbook Problem
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Rent received in advance by the lessor for an operating lease should be recognized as revenue

  1. a. when received
  2. b. at the lease’s inception
  3. c. over the lease term
  4. d. at the lease’s expiration

To determine

In an operating lease, lessor receives rent in advance; it should be recognized as revenue:

Explanation

Under operating lease, when a lessor receives rent in advance should be recognized as a revenue over a lease period.

The above explanation is matching with the option c) over a lease term. Thus, this option is correct option.

    a) Advance rent revenue is recognized as revenue over a lease term, but not when it is received. Thus, this option is incorrect...

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