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11 June, 09:12

On April 1, 2021, Primer Corp. signs a five-year lease to use office space. The present value of the monthly lease payments is $100,000. Record the lease. (If no entry is required for a particular transaction/event, select "No Journal Entry Required" in the first account field.)

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  1. 11 June, 09:24
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    April 1, 2021

    Dr. Right to use $100,000

    Cr. Lease Liability $100,000

    Explanation:

    Lease Liability is recorded at the present value of the future lease cash flows. The lease to use an Asset is a right for which the lessee pays. The right to use is considered as an asset. So it is debited as assets have debit balances. On the other hand a Lease Liability for the same amount is incurred which needs to be adjusted in whole lease period.
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