Lease Types and Journal Entries

In this video, I explain how to identify financing and operating leases under ASC 842. Then I will show you the monthly journal entries for each type of lease for lessees. You will set up the right-of-use asset and the lease liability before you make the entries shown in this video.
0:00 Introduction
0:27 Financing and operating leases
1:25 Financing lease defined
3:30 Operating lease defined
3:59 Operating lease journal entry
4:20 Straight-line operating lease amount
5:15 Operating lease journal entry
6:49 Financing lease journal entry
9:05 Summary

[@MrGAM14]

Thank you for creating this video

[@user-jc7xm2xj5c]

Thank you for this information

[@CPAHallTalk]

My pleasure

[@michael_083]

Under 842, ROU Amortization is supposed to be straight lined - Not sure if I am misinterpreting your slide…? 6:25

[@Corgidad2222]

Great video.

[@CPAHallTalk]

Thanks!

[@kimsadowski4058]

Hi Charles. Do you have an example set of financials for this video that you could also talk about, as if these leases were all the company had on the books? I would like to see where they are in the Chart of Accounts, best case scenario, and I am sure order matters on the Balance Sheet. Yes, I do ask for the moon! Kindest, Kim

[@CPAHallTalk]

Kim, I’m sorry, but I don’t. I made up these numbers without reference to a particular entity. The chart of accounts for finance and operating leases would include: (1) ROU asset, (2) ROU short term liability, (2) ROU long term liability, (3) interest expense, (4) ROU amortization, and (5) lease expense, (6) ROU accumulated amortization.

[@kimsadowski4058]

@@CPAHallTalk Thank you, Charles, for the lightning-fast detail!!!