If an asset is given on lease to an external party then what will be the journal entry for the interest received on the asset???
Also will we record depriciation on asset in our books???
Dear Student
Interest Received on the asset, is the income for us , Therefore Journal entry would be :
Depreciation on the asset shall be provided on the basis on which asset is given on lease ,i.e terms and condition on which asset is given on lease . If Risk and Rewards of the asset is transferred to lessee then depreciation shall not be recorded in our books , But if risk and reward is not transferred then we have to record depreciation in our books .
Regards
Interest Received on the asset, is the income for us , Therefore Journal entry would be :
| Bank A/c | Dr. | xxx | |
| To Interest Income A/c | xxx | ||
| (Being interest received) | |||
Depreciation on the asset shall be provided on the basis on which asset is given on lease ,i.e terms and condition on which asset is given on lease . If Risk and Rewards of the asset is transferred to lessee then depreciation shall not be recorded in our books , But if risk and reward is not transferred then we have to record depreciation in our books .
Regards