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CSB Solutions
Apr 10, 2007, 06:53 PM
If a company owns equipment and it is on the books as a fixed asset, then 'leases' it to a financial company for three years -- how do you record the entries?

The financial company pays me $50,000 cash for the equipment. I lease / to own it back over the next three years. What would the JE be for the initial $50,000 and then each lease payment. Is this equipment still part of my fixed assets during these three years?

Thanks,
CSB

CaptainForest
Apr 10, 2007, 08:25 PM
Sounds like an operating lease to me.

You still own this equipment, just are renting it out.

You should indicate that you don't have possession of the equipment.

Dr. Cash 50,000
Cr. Rent Revenue 50,000