In this video, I explain how to identify financing and operating leases under ASC 842. Then I will show you the monthly journal entries for each type of lease for lessees. You will set up the right-of-use asset and the lease liability before you make the entries shown in this video.
0:00 Introduction
0:27 Financing and operating leases
1:25 Financing lease defined
3:30 Operating lease defined
3:59 Operating lease journal entry
4:20 Straight-line operating lease amount
5:15 Operating lease journal entry
6:49 Financing lease journal entry
9:05 Summary