CFA CFA Level 1 L1 Capital Lease Balance Sheet Question

L1 Capital Lease Balance Sheet Question

  • Author
    Posts
    • Avatar of mvibsmvibs
      Participant
        • CFA Level 1
        Up
        5
        ::

        Figured it out thanks. 

        Interest expense needs to reduce shareholder equity, so while it’s on the other side of the bs, liabilities would not get affected by interest. 

        A = L + E
        10000 credit to cash, 8,000 debit to lease liability and 2,000 debit from shareholders equity as a result of lower retained earnings. 

    Viewing 0 reply threads
    • You must be logged in to reply to this topic.