Why is the principal portion of a lease receipt of a financing lease treated as an investment

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Why is the principal portion of a lease receipt of a financing lease treated as an investment inflow on the lessor’s books while the principal portion of a lease payment is treated as a financial cash outflow on the lessee’s books?

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Intermediate Accounting

ISBN: 978-0324592375

17th Edition

Authors: James D. Stice, Earl K. Stice, Fred Skousen

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Question Posted: Jan 28, 2012 05:19 AM

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Why is the principal portion of a lease receipt of a financing lease treated as an investment

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The lessor treats a lease as an investing or an operating activity If it is a direct financing leas...View the full answer

Intermediate Accounting

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