[Lighthaven]

So I’m currently reviewing the Lease chapter in Becker and this is the Journal Entry for recording Direct Financing Lease:

DR Lease payments receivables

---

CR Unearned Interest Revenue

---

CR Asset

I’m just wondering why we credit an asset? I understand under Direct Financing Leases that we are not earning a profit, just interest. But does this asset represent the asset we’re giving up in the lease to the lessee or am I way off base here?

Thanks so much!

AUD - 83
REG - 81 (2x)
FAR - 78
BEC - 85

And that's all she wrote.