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).

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