- operating lease is simply viewed as a true rental for both the lessee and the lessor. The basic J/E look like this:
- CASH X
- RENT REV X
important aspects are: lessor depreciates the asset, also the lessor amortizes direct lessee costs(legal fees, commissions), and the lessor has to expense all executory costs(taxes, maintenance, etc), security deposits that are refundable are a liability until returned and security deposits that are not refundable are viewed as unearned revenue.